Safe and Sound

LegacyTexas Bank

Plano, TX
4
Star Rating
LegacyTexas Bank is an FDIC-insured bank founded in 2006 and currently headquartered in Plano, TX. As of June 30, 2017, the bank had equity of $1.01 billion on assets of $8.97 billion.

U.S. bank customers have $6.59 billion on deposit at 45 offices in TX run by 862 full-time employees. With that footprint, the bank currently holds loans and leases worth $7.61 billion, $4.27 billion of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, LegacyTexas Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial stability, capital is valuable. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, LegacyTexas Bank received a score of 10 out of a possible 30 points, less than the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. LegacyTexas Bank's Tier 1 capital ratio was 9.97 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic difficulties.

Overall, LegacyTexas Bank held equity amounting to 11.29 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these kinds of assets could eventually be required to use capital to cover losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and increasing the chances of a future failure.

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

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 1.29 percent of LegacyTexas Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above 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 . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on LegacyTexas Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

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

One important way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. LegacyTexas Bank's most recent annualized quarterly return on equity was 10.01 percent, above the national average of 9.28 percent.

The bank recorded net income of $49.8 million on total equity of $1.01 billion for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.16 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.