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Financial stocks were hammered again Thursday with Washington Mutual Inc. (NYSE: WM) chalking up the biggest percentage decline – about 13% – as questions remain about the bank's mortgage portfolio. Earlier this week, the savings and loan company reported a $3 billion loss -- the biggest quarterly decline in the bank's history. The bank came out late in the day saying that it does its business through its banking operations and "does not rely on commercial paper" after a report took a shot at the bank's credit quality. But despite that reassurance, investors are left to wonder just how sound Washington Mutual really is.
And who can blame them? The collapse of the once-venerable Bear Stearns and the failure of California-based thrift IndyMac prove that it's hard to give even the biggest, most respected ones a safety seal of approval. And with expectations that more will fail (see list of those at risk), I've gotten curious about how my own bank is faring.
While I've been more than impressed with my bank, Chevy Chase 's services, a new tool from bankrate.com that lets you check the safety of your hometown bank, has me more than a little concerned. The Safe & Sound rating system uses a series of 22 tests to measure the capital adequacy, asset quality, profitability and liquidity of each financial institution.\
On a scale of 1 to 5 -- with 5 being lowest rated and 1 being superior -- my bank, Virginia-based Chevy Chase , got a 5. But once I dug into the financial summary on my bank is when I really started to worry. According to the report, as of March 31, Chevy Chase reported $15.1301 billion in total assets, with mortgage loans and deposits held by the institution, at that date, amounting to $10.7869 billion and $11.5949 billion respectively.
And with nearly $11 billion in mortgage loans, and the Washington region hurt by one of the fastest growing foreclosure rates in the nation, one thing is for sure. I will certainly, after watching the rush on IndyMac bank, start spreading my money around before I reach $100,000 in my account – the maximum insured by the FDIC. So should you.
Click here to check your bank's rating.
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