Safe and Sound

Texas Capital Bank, National Association

Dallas, TX
4
Star Rating
Texas Capital Bank, National Association is a Dallas, TX-based, FDIC-insured bank founded in 1997. The bank holds equity of $2.17 billion on $25.05 billion in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 1,561 full-time employees in 14 offices in TX, the bank currently holds loans and leases worth $21.49 billion, including real estate loans of $6.96 billion. U.S. bank customers currently have $19.27 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Texas Capital Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial instability. It follows then that when it comes to measuring an an institution's financial strength, capital is key. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Texas Capital Bank, National Association received a score of 8 out of a possible 30 points, coming in below the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Texas Capital Bank, National Association's Tier 1 capital ratio was 8.28 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Texas Capital Bank, National Association held equity amounting to 8.67 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

A bank with large numbers of these types of assets could eventually be required to use capital to cover losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and elevating the risk of a future failure.

Texas Capital Bank, National Association scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.60 percent of Texas Capital Bank, National Association'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 to handle troubled 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 problem loans. Unfortunately, the FDIC did not provide information on Texas Capital Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

Texas Capital Bank, National Association scored 18 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Texas Capital Bank, National Association's most recent annualized quarterly return on equity was 10.06 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $204.5 million on total equity of $2.17 billion. The bank had an annualized return on average assets, or ROA, of 0.89 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.