Before the introduction of banks, individuals often store their money in various locations. Some prefer to store it in a safe place at home, such as under their bed or in a cupboard. At the same time, others kept theirs with a trusted individual for security reasons. Fast-forward to today, the introduction of banks (a haven for your money) has eliminated the need to store money elsewhere. But are all banks safe? Absolutely not, if you’ll ask me! Considering that, you should keep your money in a safe bank. And what bank is that?
State Street Bank, Bank of New York Mellon Cooperation – these banks are considered as the safest not only because they have facilities designed to protect your funds, but also, because they provide enough protection to depositors.
Everyone would agree that the safest way to store money is by depositing it in banks. While we would agree that banks are safe, you must note that this doesn’t apply to all banks. Some banks look safe, but they aren’t. In light of this, before opening a bank account, you may want to do some digging to find out how secure the bank is. A safe bank often provides adequate protection to customers. However, finding such banks may be a hassle. For this reason, I have decided to do some digging, and I came up with an invaluable list of some of the safest banks in the United States.
What Is the Safest Bank to Put Your Money In?
When choosing a bank, we often ensure that we go for one with a good track record of keeping people’s money safe. This will ensure that our funds are secure, even In the event of a financial crisis, theft, or other circumstances that could put our money at risk.
What makes a Bank Safe?
Banks are financial institutions where most Americans keep their hard-earned money, depositing into checking and savings accounts to handle most of their day-to-day financial transactions. While most banks offer protection to depositors, it is crucial to know what that protection involves, how much of your funds are secured, and what standards most banks are held to.
Before you deposit money into any bank, you want to ensure that the money you deposit is protected by the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency created by Congress after the Great Depression to maintain stability, including public trust in the nation’s financial system.
Here are a few things you need to know about FDIC insurance:
- FDIC insurance covers bank deposits up to $250,000 per person, per bank, for each ownership category
- If the bank experiences a financial crisis, the FDIC will refund each deposit up to the insured amount for each account
- The FDIC has federal backing, and member banks pay premiums to insure deposits
How to Know If a Bank Is Safe?
While having a federally backed agency ensure some of your deposits is commendable, it doesn’t mean the bank is entirely safe. To determine the safety of a bank, FDIC or NCUA insurance is a requirement. However, you can also do some digging to see which banks are on a troubled financial foundation.
Maybe the most accurate way to do this is using what is known as the Texas Ratio. This ratio was developed by RBC Capital Market’s banking analyst Gerard Cassidy to foretell bank decline during the state’s 1980s recession.
The Texas Ratio is determined by dividing the bank’s non-performing assets (non-performing loans including the real estate now owned by the bank as it foreclosed on the property) by its tangible common equity and loan loss reserves. While the calculation may seem complex, the assumption is that a bank that boasts of more non-performing assets than equity and reserves may be in the soup. So if the Texas Ratio is 1.0 (100%) or above, the bank is in trouble.
Safest Banks in U.S.:
While most FDIC-insured banks can be deemed safe, having a low Texas Ratio means the bank manages debt effectively. Based on data from Bank Reg, out of the top 100 banks (by assets), there are only a few with Texas ratios below 5.0%.
|Bank name||Total Assets||Texas Ratio (%)|
|State Street Bank and Trust Company||313,281,000,000||0.00|
|Charles Schwab Corporation||396,473,000,000||0.28|
|Bank of New York Mellon Corporation||417,169,890,000||0.58|
|UBS Bank USA||91,110,922,000||0.86|
|Stifel Financial Corp.||20,538,616,000||0.89|
|New York Community Bank||57,633,106,000||1.01|
|Deutsche Bank Aktiengesellschaft||37,866,430,000||1.04|
|Silicon Valley Bank||140,260,913,000||1.07|
|First Republic Bank||155,797,960,000||1.40|
|Raymond James Bank||33,220,680,000||1.41|
|Pacific Premier Bank||20,172,309,000||1.69|
|The Northern Trust Company||163,541,275,000||1.72|
|First Hawaiian Bank||23,496,497,000||2.39|
|Royal Bank of Canada||86,736,280,000||2.58|
|South State Bank||39,608,763,000||2.79|
|Texas Capital Bank||40,035,375,000||3.31|
|Atlantic Union Bank||19,800,793,000||3.52|
|Wintrust Financial Corporation||45,667,569,000||3.54|
|Hancock Whitney Bank||35,049,974,000||4.29|
|Western Alliance Bank||43,451,450,000||4.60|
|City National Bank of Florida||19,742,021,000||4.62|
|Canadian Imperial Bank Of Commerce||44,208,963,000||4.76|
Where Do You Put Your Money if You Don’t Trust Banks?
Banks are often trusted when it comes to securing your money. However, there exist some shady banks out there that hide in the shadow of genuine ones. Thus, if you lost your trust in this financial institution for one reason or the other, are there other alternatives? If yes, what are they?
If you don’t trust banks, you can store your money in a college savings account, bury it, invest it in cryptocurrency or other high-valuable assets, or even buy federal bonds.
If you decided to store your money in a place other than a bank, ensure that you are ready to face the consequences as these places or mediums have a few disadvantages of their own.