Safe and Sound

NexBank, SSB

Dallas, TX
5
Star Rating
NexBank, SSB is an FDIC-insured bank founded in 1934 and currently based in Dallas, TX. Regulatory filings show the bank having equity of $463.4 million on $6,379,820,000 in assets, as of June 30, 2017.

With 87 full-time employees in 3 offices in TX, the bank currently holds loans and leases worth $3.92 billion, including real estate loans of $2.67 billion. U.S. bank customers currently have $5.85 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, NexBank, SSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial strength. It acts as a cushion against losses and as protection for depositors when a bank is experiencing economic trouble. From a safety and soundness perspective, the higher the capital, the better.
NexBank, SSB received a score of 4 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. NexBank, SSB's Tier 1 capital ratio was 12.33 percent, higher than the 6 percent level considered adequate by regulators, 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 downturns.

Overall, NexBank, SSB held equity amounting to 7.26 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these types of assets could eventually have to use capital to cover losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, NexBank, SSB scored 40 out of a possible 40 points, beating the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.03 percent of NexBank, SSB's loans were noncurrent -- in other words, 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. NexBank, SSB's loan loss allowance was 1,892.88 percent of its total noncurrent loans, above the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

NexBank, SSB beat the national average on Bankrate's earnings test, achieving a score of 30 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. NexBank, SSB's most recent annualized quarterly return on equity was 29.43 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $59.6 million on total equity of $463.4 million. The bank reported an annualized return on average assets, or ROA, of 2.19 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.