Safe and Sound

Falcon International Bank

Laredo, TX
4
Star Rating
Laredo, TX-based Falcon International Bank is an FDIC-insured bank founded in 1986. The bank has equity of $125.4 million on $1,132,256,000 in assets, according to June 30, 2017, regulatory filings.

With 330 full-time employees in 17 offices in TX, the bank currently holds loans and leases worth $745.1 million, including real estate loans of $621.8 million. U.S. bank customers currently have $1.00 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Falcon International Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is important. It works as a cushion against losses and provides protection for accountholders during periods of economic instability for the bank. When looking at safety and soundness, more capital is preferred.
Falcon International Bank beat out the national average of 13.38 points on our test to measure the adequacy of a bank's capital, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Falcon International Bank's Tier 1 capital ratio was 15.85 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Falcon International Bank held equity amounting to 11.07 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

A bank with lots of these types of assets may eventually be forced to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, diminishing earnings and elevating the risk of a future failure.

Falcon International Bank fell short of the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.41 percent of Falcon International Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Falcon International Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Falcon International Bank scored 18 out of a possible 30, exceeding the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. Falcon International Bank's most recent annualized quarterly return on equity was 10.02 percent, above the national average of 9.28 percent.

The bank reported net income of $6.1 million on total equity of $125.4 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.09 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.