Safe and Sound

Texas Hill Country Bank

Bandera, TX
4
Star Rating
Bandera, TX-based Texas Hill Country Bank is an FDIC-insured bank founded in 2009. As of June 30, 2017, the bank held equity of $12.2 million on $105,021,000 in assets.

Thanks to the work of 23 full-time employees in 2 offices in TX, the bank currently holds loans and leases worth $83.9 million, including $60.9 million worth of real estate loans. The bank currently holds $92.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Texas Hill Country Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three important criteria Bankrate used to grade U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for accountholders when a bank is experiencing economic instability. It follows then that a bank's level of capital is a crucial measurement of a bank's financial strength. When looking at safety and soundness, more capital is preferred.
Texas Hill Country Bank achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, better than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Texas Hill Country Bank's Tier 1 capital ratio was 14.95 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Texas Hill Country Bank held equity amounting to 11.60 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due mortgages.

A bank with a large number of these kinds of assets could eventually have to use capital to absorb 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 diminished earnings and potentially more risk of a future failure.

Texas Hill Country Bank exceeded the national average of 37.62 on Bankrate's asset quality test, racking up 40 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, 0.31 percent of Texas Hill Country 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 . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Texas Hill Country Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, expanding 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 are less able to do those things.

Texas Hill Country Bank scored 14 out of a possible 30 on Bankrate's earnings test, coming in below 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. The most recent annualized quarterly return on equity for Texas Hill Country Bank was 6.93 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $413,000 on total equity of $12.2 million. The bank had an annualized return on average assets, or ROA, of 0.82 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.