Safe and Sound

Texas Brand Bank

Garland, TX
5
Star Rating
Texas Brand Bank is a Dallas, TX-based, FDIC-insured bank dating back to 2005. As of December 31, 2017, the bank had equity of $24.6 million on $178.1 million in assets.

With 27 full-time employees in 2 offices in TX, the bank currently holds loans and leases worth $143.7 million, including real estate loans of $125.6 million. U.S. bank customers currently have $152.4 million in deposits with the bank.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is a useful measurement of an institution's financial resilience. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Texas Brand Bank achieved a score of 18 out of a possible 30 points, beating the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Texas Brand Bank's Tier 1 capital ratio was 17.40 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Texas Brand Bank held equity amounting to 13.79 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets may eventually have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and elevating the chances of a future failure.

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

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, none of Texas Brand 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Texas Brand Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Conversely, losses lessen a bank's ability to do those things.

Texas Brand Bank fell behind the national average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Texas Brand Bank's most recent annualized quarterly return on equity was 7.78 percent, below the national average of 8.10 percent.

The bank earned net income of $1.6 million on total equity of $24.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.92 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.