Safe and Sound

Texas Bank

Brownwood, TX
5
Star Rating
Brownwood, TX-based Texas Bank is an FDIC-insured bank started in 1966. As of December 31, 2017, the bank had equity of $62.2 million on $484.2 million in assets.

With 110 full-time employees in 9 offices in TX, the bank currently holds loans and leases worth $365.5 million, including real estate loans of $340.2 million. U.S. bank customers currently have $399.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Texas Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is key. It acts as a bulwark against losses and affords protection for accountholders when a bank is experiencing financial instability. When looking at safety and soundness, the higher the capital, the better.

Texas Bank scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Texas Bank's Tier 1 capital ratio was 15.86 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic difficulties.

Overall, Texas Bank held equity amounting to 12.85 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due mortgages.

A bank with extensive holdings of these types of assets may eventually have to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

Texas Bank scored above the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.25 percent of Texas Bank'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 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Texas Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

Texas Bank exceeded the national average on Bankrate's test of earnings, achieving a score of 26 out of a possible 30.

One important measure of 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 Bank was 18.22 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $11.1 million on total equity of $62.2 million. The bank reported an annualized return on average assets, or ROA, of 2.38 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.