The Strongest Banks Out There

The concentration in C&I loans is reflected in the net interest spread, which is the difference between the bank's average cost of funds and average rate received from loans and securities investments. The spread was 5.64% during the second quarter, compared with an aggregate spread of 3.31% for all U.S. banks and thrifts.

Silicon Valley Bank focuses on the life sciences, technology, private equity and wine industries, with 27 offices in the U.S. and others in China, the U.K., Israel and India. It also makes loans to private banking clients. The decline in the spread was expected, in light of the Fed's interest rate cuts.

SVB Financial Group CEO Ken Wilcox said Silicon Valley Bank has "avoided real estate lending over the years, because we have seen other banks choke on real estate at various points." He also said he has been focused on C&I lending in Silicon Valley for most of his career, and that most of the experts in that niche are "employed by our bank." Wilcox went on to point out that Silicon Valley businesses have been "relatively unaffected" by business cycles, and that Silicon Valley Bank had relatively low loan losses, even during the 2001 technology sector downturn.

Washington Federal Savings (held by Washington Federal(WFSL Quote)) is the highest-ranking large S&L on the list, with an A rating. Unlike many large thrifts, Washington Federal has weathered the mortgage storm quite well, maintaining returns on average assets above 1% over the past year, while keeping nonperforming assets below 1%. While loan losses have increased, the institution's ratio of net charge-offs to average loans was quite low, at 0.27% for the first half of 2008.

The following table lists the 20 highest-ranking A+ rated U.S. banks and thrifts:

Click here for larger image.

Source: Source: June 30, 2008 regulatory data, via Highline Financial, Inc.

Calvin B. Taylor Banking of Berlin, Md., ranked highest in TheStreet.com's ratings model, based on second quarter financial performance. The $358 million institution, chartered in 1890, consistently posts very strong earnings, with nearly perfect loan quality and very strong capital levels.

President and CEO Ray Thompson attributed the bank's strong loan quality to "knowing the customer" and "underwriting on the ability to pay, first." He also emphasized the institution's conservative investment policy, which is to mainly buy U.S. Treasury securities and steer clear of riskier paper, such as preferred stock.

In the current environment, even depositors at historically strong banks are worried. Thompson said the institution's management is actively communicating with depositors. "We explain the difference between investment firms and community banks. We also educate them on FDIC insurance."

Thompson said smaller banks were not the cause of the mortgage crisis, and despite all the bad news on large banks, "the community banks are open for business."

New Deposit Insurance Limits

On Oct. 3, the FDIC announced that deposit insurance limits on non-retirement accounts would temporarily increase from $100,000 to $250,000 per depositor through Dec. 31, 2009. For joint accounts, the limit has increased to $250,000 per depositor. The limit for retirement account balances has remained $250,000. These limits are for the total of an account holder's deposits in each bank. Your deposit coverage situation may be more complicated, so it is best to use the FDIC's Insurance Estimator to calculate your insurance limits.