Safe and Sound

PlainsCapital Bank

Dallas, TX
5
Star Rating
Dallas, TX-based PlainsCapital Bank is an FDIC-insured bank started in 1955. Regulatory filings show the bank having equity of $1.38 billion on $9.63 billion in assets, as of December 31, 2017.

With 4,176 full-time employees in 65 offices in TX, the bank currently holds loans and leases worth $7.53 billion, including real estate loans of $5.87 billion. U.S. bank customers currently have $7.55 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, PlainsCapital Bank 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 evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial fortitude. It works as a bulwark against losses and affords protection for accountholders when a bank is experiencing financial trouble. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, PlainsCapital Bank achieved a score of 14 out of a possible 30 points, beating the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. PlainsCapital Bank's Tier 1 capital ratio was 14.47 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, PlainsCapital Bank held equity amounting to 14.32 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having lots of these kinds of assets may eventually force a bank to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, PlainsCapital Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.89 percent of PlainsCapital Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing 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 problem assets. Unfortunately, the FDIC did not provide information on PlainsCapital Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, PlainsCapital Bank scored 18 out of a possible 30, above the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for PlainsCapital Bank was 8.41 percent, above the national average of 8.10 percent.

The bank earned net income of $114.5 million on total equity of $1.38 billion for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.20 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.