Safe and Sound

Texas Gulf Bank, National Association

Houston, TX
5
Star Rating
Houston, TX-based Texas Gulf Bank, National Association is an FDIC-insured bank founded in 1913. As of June 30, 2017, the bank held equity of $63.4 million on assets of $587.5 million.

Thanks to the efforts of 109 full-time employees in 9 offices in TX, the bank currently holds loans and leases worth $366.6 million, $305.5 million of which are for real estate. The bank currently holds $522.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Texas Gulf Bank, National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is essential. It acts as a bulwark against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is better.
On our test to measure capital adequacy, Texas Gulf Bank, National Association received a score of 12 out of a possible 30 points, falling short of the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Texas Gulf Bank, National Association's Tier 1 capital ratio was 14.41 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, Texas Gulf Bank, National Association held equity amounting to 10.79 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 loans.

Having extensive holdings of these types of assets suggests a bank may have to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Texas Gulf Bank, National Association scored 40 out of a possible 40 points, beating out the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.51 percent of Texas Gulf 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 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 problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Texas Gulf Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial shocks. However, banks that are losing money are less able to do those things.

Texas Gulf Bank, National Association scored 20 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 16.52.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Texas Gulf Bank, National Association's most recent annualized quarterly return on equity was 10.77 percent, above the national average of 9.28 percent.

The bank recorded net income of $3.3 million on total equity of $63.4 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.14 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and equal to 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.