FDIC Problem Bank List Hits 416, Which Banks are at Risk?

The FDIC problem bank list rose to 416 at the end of August making many Americans fearful that their money is at risk. While the FDIC does publish a list of banks that have failed since 2000, there is no actual list of banks that are on the brink of failure. So how do you know which banks are at risk? The short answer is, you can't know for sure, but you can find some clues if you are willing to do some leg work.

The FDIC bank failure list shows all the banks that have failed since 2000. To see if your bank is at risk, look for commonalities with these banks. Consider examining the public financial statements of your bank to see if it is in financial trouble, most banks are publicly traded companies and are required by law to make their financial statements known.

A less labor intensive, more high tech way to monitor your bank's risk factor is to pay close attention to financial news to see if your bank's name pops up. Consider setting up Google alerts for your bank's name and the FDIC. Ideally set up three separate Google alerts; 1) your bank's name, 2) FDIC, and 3) your bank's name + FDIC.

See the FDIC Failed Banks List

Even if your bank is in trouble, you are most likely safe. Unlike during the Great Depression, now bank deposits are insured up to $100,000 each. If you have more than that in one account consider opening up additional accounts so that no one has a balance higher than $100,000.

Learn more about how FDIC insurance works

There is no public FDIC problem bank list, only a failed bank list, because the FDIC does not want to create a panic when consumers find that their bank is at risk. For this reason no actual public problem list exists, it is simply an internal tool used at the FDIC to rank banks that are at risk of failure.

Every 12-18 months the FDIC reviews the "health" of various banks in a stress test. The tested banks are rated on a scale of 1 to 5 with 1 being the best rating and 5 the worst. The factors examined by the FDIC when determining a rating, include: Capital levels, liquidity, asset quality earnings, outstanding debt, and even the credit worthiness of high balance debtors.

The warning signs of a very risky bank include: insufficient cash on hand to cover withdrawals, poor risk management policies and/or history, growing delinquent loans without the proper capital/assets to cover the losses. Any bank that scores a 4 or 5 after this stress test will be added to the FDIC problem bank list and will be given a list of things to address to be deemed in good health.

One statistic that should be of comfort to all bank customers in these troubled times, even if you fear your bank is on the problem bank list. Only 13% of all banks that are put on the FDIC problem bank list end up on the failed bank list.