Safe and Sound

Texas Advantage Community Bank, National Association

Alvin, TX
4
Star Rating
Texas Advantage Community Bank, National Association is an Alvin, TX-based, FDIC-insured bank dating back to 2006. The bank holds equity of $10.0 million on $112,425,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the work of 21 full-time employees in 2 offices in TX, the bank holds loans and leases worth $71.9 million, $39.4 million of which are for real estate. The bank currently holds $102.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Texas Advantage Community Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for accountholders when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial fortitude, capital is valuable. When it comes to safety and soundness, the more capital, the better.
Texas Advantage Community Bank, National Association finished below the national average of 13.38 on our test to measure the adequacy of a bank's capital, scoring 8 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Texas Advantage Community Bank, National Association's Tier 1 capital ratio was 15.78 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Texas Advantage Community Bank, National Association held equity amounting to 8.87 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 reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid loans.

A bank with lots of these types of assets could eventually be required to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

Texas Advantage Community Bank, National Association scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.48 percent of Texas Advantage Community Bank, National Association'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 keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Texas Advantage Community Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

Texas Advantage Community Bank, National Association scored 10 out of a possible 30 on Bankrate's earnings test, lower than the national average of 16.52.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Texas Advantage Community Bank, National Association's most recent annualized quarterly return on equity was 5.10 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $248,000 on total equity of $10.0 million. The bank had an annualized return on average assets, or ROA, of 0.46 percent, below the 1 percent deemed satisfactory in accordance with industry standards and 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.