Safe and Sound

Texas National Bank

Sweetwater, TX
4
Star Rating
Sweetwater, TX-based Texas National Bank is an FDIC-insured bank founded in 1995. The bank holds equity of $13.3 million on $128.8 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 28 full-time employees in 2 offices in TX, the bank holds loans and leases worth $33.6 million, $18.5 million of which are for real estate. U.S. bank customers currently have $115.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Texas National Bank 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 American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders during periods of financial instability for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is crucial. When looking at safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, Texas National Bank received a score of 10 out of a possible 30 points, below the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Texas National Bank's Tier 1 capital ratio was 24.66 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, Texas National Bank held equity amounting to 10.33 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets suggests a bank may have to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

Texas National Bank exceeded the national average of 37.49 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 December 31, 2017, none of Texas National 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 . The size of that reserve 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 National Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, Texas National Bank scored 14 out of a possible 30, coming in below the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Texas National Bank was 6.03 percent, below the national average of 8.10 percent.

The bank recorded net income of $811,000 on total equity of $13.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.62 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.