Ranking your bank.

• Author: Kaelble, Steve

How does your financial institution stack up?

Every now and then, something shakes some people's faith in the banking industry. In recent years Americans experienced the savings-and-loan calamity, and doom-sayers last year predicted a similar crisis with banks, a crisis that never materialized.

When the national headlines turn gloomy, many Indiana depositors turn to their banks and S&Ls for reassurance. "People want to know you're safe," says Christopher Murphy III, president and CEO of 1st Source Bank in South Bend. "Older people like to know that their banks are safe and secure, and investors like to know that there is quality in the earnings numbers and that they're likely to continue."

"I think the general public is very prone to believe a lot of bad things, and it's sometimes questionable whether they really understand," says Frank Pavlic, chairman, president and CEO of First Federal Savings Bank of Indiana in Merrillville.

Those who investigate usually find that the troubles they may have read about are not problems in the Hoosier state. How do concerned customers make such determinations? Bankers and experts say there are a number of ways to learn about the performance and soundness of one's financial institution.

"There are really three major things to consider," Murphy says. To consider them one needs a financial report from the institution. "The first thing is credit quality. Without credit quality you have no future. I'd look at the non-performing assets, see the trend, see the loan-loss reserve and see how much coverage there is of the non-performing assets."

Top-Performing Banks With Assets of $1 billion-plus 1992 Return Bank City on Assets Bank One Indianapolis Indianapolis 1.87 Citizens National Bank Evansville 1.32 Old National Bank Evansville 1.27 1st Source Bank South Bend 1.06 Fort Wayne National Bank Fort Wayne 1.00 Top-Performing Banks With Assets of $500-999 million 1992 Return Bank City on Assets Bank One Lafayette Lafayette 2.15 Bank One Merrillville Gary 1.41 Citizens Fidelity Bank New Albany 1.36 Calumet National Bank Hammond 1.19 Terre Haute First National Bank Terre Haute 1.18 The second important component, Murphy says, is profitability and efficiency. "Look at the expense-to-revenue ratio and see what direction it's going. The last piece is whether or not the bank is getting customers. Is it growing? Are there more deposits, more assets than last year?"

It may sound complicated, but customers don't necessarily have to go to...