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A weak bank or thrift represents a potential for financial loss to its depositors, as well as a number of headaches and hassles for both its depositors and borrowers.

If a failed institution is taken over by another bank, customers can be forced to accept lower interest rates on their CDs or even lose an existing line of credit.

That's why it's important to check the financial security offered by a financial institution prior to opening an account and then periodically monitor the company's condition going forward.

Low-rated banks and thrifts should be avoided in favor of highly rated companies. Ratings analyzes the financial results of U.S. banks and savings and loans (thrifts), based on the institutions' quarterly financial reports. The Financial Strength Ratings are designed to give depositors and financial professionals a solid indication of an institution's risk of failure.

Many parties can be affected when an institution is troubled, including businesses, municipalities and financial institutions relying on credit lines or extending credit to the institution.

While some ratings agencies only consider a bank or thrift's current financial solvency and its ability to weather mild economic adversity, our analysis covers an institution's ability to handle severe adversity, in terms of a sharp decline in earnings or asset quality.

The following U.S. banks and thrifts received the lowest ratings from Ratings:

The following U.S. banks and thrifts received the highest ratings from Ratings:

What Our Ratings Mean


-- Excellent. The institution offers excellent financial security. It has maintained a conservative stance in its business operations as evidenced by its strong equity base, top-notch asset quality, steady earnings and high liquidity. While the financial position of any institution is subject to change, we believe that this institution has the resources necessary to deal with severe economic conditions.


-- Good. The institution offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria and is likely to remain healthy for the near future. Nevertheless, in the event of a severe recession or major financial crisis, we feel that this assessment should be reviewed to make sure that the institution is still maintaining adequate financial strength.

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-- Fair. The institution offers fair financial security, is currently stable and will likely remain relatively healthy as long as the economic environment avoids the extremes of inflation or deflation. In a prolonged period of adverse economic or financial conditions, however, we feel this institution may encounter difficulties in maintaining its financial stability.


-- Weak. The institution currently demonstrates what we consider to be significant weaknesses which could negatively impact depositors or creditors. In an unfavorable economic environment, these weaknesses could be magnified.


-- Very Weak. The institution currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests that we use to identify fiscal stability. Therefore, even in a favorable economic environment, it is our opinion that depositors or creditors could incur significant risks.


-- Failed. The institution has been placed under the custodianship of regulatory authorities. This implies that it will be either liquidated or taken over by another financial institution.


-- The plus sign is an indication that the institution is at the upper end of the letter grade rating.


-- The minus sign is an indication that the institution is at the lower end of the letter grade rating.


-- Unrated Institutions. The institution is unrated due to insufficient data at the time its rating was updated.

This article was written by a staff member of Ratings.