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The Best U.S. Banks and Thrifts Now

As the credit crisis and recession drags on, it's increasingly important to monitor the health of the bank or savings and loan that holds your money. While the FDIC has temporarily increased its individual deposit insurance limit to $250,000 (from $100,000) per account and waived insurance limits on non-interest bearing business checking deposits, these increases are set to expire at the end of this year.

And the end of the year will be here before we know it.

Regarding business checking, it is pretty easy for a business or municipal entity (such a s school district) to have large amounts of somebody else's money flowing through a transaction account. Since it's important to have a stable banking relationship, you should look into your bank's health way before the deposit insurance limit waiver on business transaction accounts expires.

It's easy to get your institution's rating for free via Ratings, and if your bank or S&L has a rating of D+ or below, you might want to discuss the situation with your banker. Ratings' model places the strongest weighting on capital adequacy, earnings and asset quality. The following table includes common ratios in these categories for the past five quarters:

U.S. Bank and S&L Industry Aggregates
Highline Financial Inc.

Combined industry net income for the third quarter was $1.9 billion, compared to $29.8 billion a year earlier. While the earnings picture wasn't as dismal as the fourth quarter of 2007, when the industry posted a loss, earnings were sharply down from the second quarter as institutions continued to beef up reserves and many suffered big losses on investments in Fannie Mae (FNM) and Freddie Mac (FRE) preferred stock, following the mortgage giants' placement into receivership by the Treasury Department.

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