How to evaluate your bank's performance

March 22, 11:47 AMDC Managing Your Money ExaminerA.W. Berry

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Money should be safe, and well utilized especially when it’s yours and entrusted to a bank. With all the effects of the financial crisis, now might be a good time to double check if your financial institution is in good shape. Evaluating your bank essentially involves finding the right resources and benefiting from that information. Doing so can avoid wasting time and ensure you made, or are going to make a good banking decision. This article will outline 1) where to find the right information about a bank 2) what information to look for, and 3) what the data can tell you about your financial institution(s).

WHERE TO FIND INFORMATION ABOUT YOUR BANK:

Evaluating a bank’s performance involves ascertaining if core areas of banking practice are satisfactorily met by your bank. To assess this, specific information from or regarding your financial institution is necessary. There are actually a number of ways to obtain data about a bank, a few of which are mentioned below.

• Ratings agencies and listings
• FDIC bank statistics and research
• Independent analysis
• Instructional guides
• Other bank customers

WHAT TO LOOK FOR IN BANK DATA:

Core areas of competence within a banks operations include 1) financial management 2) operational management 3) services and products and 4) customer service. These core areas can be evaluated by utilizing the information you have gathered on your bank.

According to solari.com, a financial reporting site, finding a bank includes assessing the banks performance by following the steps of bank identification, obtaining recommendation, assessing bank leadership, and determining the banks financial success, products and services, cost of banking and insurability.

• Financial ratios
• Agency ratings
• Customer service
• Products and services
• Read bank policies and loan agreements

WHAT PUBLIC INFORMATION CAN TELL YOU ABOUT YOUR FINANCIAL INSTITUTION:

Information obtained from the Federal Deposit Insurance Corporation (FDIC) and other sources listed above can tell you which areas of core competence the bank excels or does not excel in. Moreover, if you are looking for a specific area of specialization from your bank, for example mortgage lending, protecting assets, business loans etc. the information gathered can assist in determining which bank is best suited for your banking goals and needs. Bank data can unravel the nexus of irrelevant bank information for the purpose of identifying what you would like to know about your bank. The list below includes just a few of the things you can learn about specific banks.

• Employee turnover
• Financial solvency and capitalization
• Competitive performance and rank
• Profitability
• Bank headquarters and number of branches

After you have determined what information you want about your financial institution, gathered that data, and then assessed is, you theoretically should have a better idea of how well a specific bank can meet your financial needs and goals. Bank evaluation can be customized to specific banking objectives by focusing the evaluation on the objectives you hope your bank can carry out for you. Much information exists on banks, partly because they are quite closely regulated and monitored by the FDIC for insurance purposes. This helps you the consumer make focused banking decisions and helps assure you that your money is safe and put to good use.