Is My Bank Safe? How to Check

Step 1: Confirm FDIC Insurance

The single most important thing you can do is verify that your bank is FDIC-insured. The vast majority of US banks are — BankHealthData tracks 3,960 FDIC-insured institutions with combined assets of $22.9T. You can verify your bank's FDIC status using the FDIC BankFind tool or by searching for it on BankHealthData. If your bank is FDIC-insured, your deposits up to $250,000 per depositor, per bank, per ownership category are guaranteed by the full faith and credit of the US government.

This guarantee has held through every financial crisis since 1933. During the 2008 financial crisis, when 489 banks failed over five years, every insured depositor was made whole. During the 2023 failures of Silicon Valley Bank and Signature Bank, insured depositors had access to their funds within days. The FDIC insurance system is the foundation of depositor confidence in American banking.

Step 2: Check the Four Key Metrics

BankHealthData evaluates every FDIC-insured bank on four financial dimensions drawn from quarterly regulatory call reports. These are the same fundamentals that bank examiners evaluate under the CAMELS rating system. Here is what each metric means for your money:

Tier 1 Capital Ratio (35% of Health Score)

The Tier 1 capital ratio is your bank's financial cushion — its core equity capital divided by risk-weighted assets. Think of it as the bank's emergency fund. Regulators consider a ratio of 8% or above to be "well-capitalized." Above 10% is strong. Above 14% is excellent. Below 6% is a regulatory red flag that triggers Prompt Corrective Action.

Among the 3,960 banks BankHealthData tracks, the healthiest institutions maintain Tier 1 ratios well above regulatory minimums. For example, First Security Bank West holds a Tier 1 ratio of 28.66%, providing a substantial buffer against potential losses.

Nonperforming Loan Ratio (30% of Health Score)

The nonperforming loan ratio measures what percentage of a bank's loans are in trouble — borrowers who have stopped paying for 90+ days. A ratio below 1% is healthy. Between 1% and 3% warrants monitoring. Above 5% is a serious warning sign. During the 2008 crisis, many failed banks had NPL ratios above 10% in the quarters before closure.

Liquidity Ratio (25% of Health Score)

The liquidity ratio measures how much cash and liquid securities a bank holds. This determines whether a bank can meet sudden withdrawal demands without selling assets at a loss — the exact scenario that brought down Silicon Valley Bank in 2023. A ratio above 20% is strong. Below 10% suggests potential liquidity stress.

Return on Assets (10% of Health Score)

Return on assets measures profitability — how much the bank earns relative to its asset base. An ROA above 1% is strong. Between 0% and 1% is acceptable. A negative ROA means the bank is losing money, which will eventually erode its capital reserves if the trend continues.

Step 3: Look at the Trend, Not Just the Score

A bank's current Health Score is important, but the trend over time is often more telling. BankHealthData tracks 8 quarters of history for every bank. A bank scoring 65 and improving tells a very different story than a bank scoring 65 and declining. On each bank's detail page, check the quarterly trend chart to see whether financial health is moving in the right direction.

Warning signs to watch for include: declining Tier 1 capital ratio (the bank is using up its cushion), rising nonperforming loans (credit quality is deteriorating), falling liquidity (the bank may struggle to meet withdrawals), and sustained negative ROA (the bank is burning through its reserves).

Step 4: Understand What Your Bank's Grade Means

BankHealthData assigns letter grades based on the composite Health Score. Currently, 1,419 banks hold an A rating, and 106 banks are rated F. Here is what each grade means in practice:

• Grade A (80-100): Excellent financial health across all four dimensions. Strong capital, clean loans, ample liquidity, solid profits.
• Grade B (65-79): Good financial health with minor areas for improvement. No immediate concerns.
• Grade C (50-64): Average — some metrics are below ideal levels. Worth monitoring quarterly.
• Grade D (35-49): Below average with notable weaknesses. Ensure your deposits are within FDIC limits.
• Grade F (0-34): Significant financial weakness. Your insured deposits remain protected, but consider diversifying across banks.

Step 5: Know the Red Flags

Banks rarely fail without warning. The following patterns, visible in FDIC data months before a failure, are the most reliable red flags:

• Tier 1 capital ratio dropping below 8% and trending downward
• Nonperforming loan ratio climbing above 5%
• Heavy concentration in commercial real estate lending (above 300% of capital)
• Declining liquidity ratio, especially below 10%
• Multiple consecutive quarters of negative return on assets
• High dependence on brokered deposits or other non-core funding

The Bottom Line

Your deposits at an FDIC-insured bank are safe up to $250,000 — period. No insured depositor has ever lost money. The BankHealthData score helps you go beyond that guarantee by identifying which banks are strongest and which show signs of weakness, so you can make informed decisions about where to keep amounts above FDIC limits, or simply for peace of mind.