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Christopher Menkin
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Christopher "Kit" Menkin is of editor (, an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
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  • Banks With Highest Texas Ratios 0 comments
    Mar 26, 2014 2:35 PM

    By Tahir Ali

    An SNL Financial Exclusive

    (click to enlarge)

    Georgia had 40 banks and thrifts over the 100% adjusted Texas ratio mark at Dec. 31, the most of any state. However, the median adjusted Texas ratio for all Georgia-based banks and thrifts was 27.87% at the end of the year. Illinois reclaimed second spot for hosting 24 institutions, with an adjusted Texas ratio of over 100%. Florida, the state with the third-highest number of institutions over 100% adjusted Texas ratio, reported an overall median Texas ratio of 27.38% as of Dec. 31, 2013.

    As of March 25, three of the five institutions that have failed in 2014 reported an adjusted Texas ratio over 100% the quarter prior to failing. Millennium Bank NA posted the highest adjusted Texas ratio among banks and thrifts at Sept. 30, 2013, at 3,330.21% and failed on Feb. 28, 2014. Vantage Point Bank reported an adjusted Texas ratio of 213.85 % at Dec. 31, 2013, and failed on Feb. 28. Bank of Union reported an adjusted Texas ratio of 345.17% at Dec. 31, 2013, prior to its failure on Jan. 24, 2014.

    The number of institutions with an adjusted Texas ratio over 100% fell to 203 at the end of 2013, compared to 235 at September 30, 2013. However, the median adjusted Texas ratio among those companies above the 100% mark ticked upward over the final quarter following a steady decline in the three prior quarters. Banks with adjusted Texas ratio over 100% reported a median adjusted Texas ratio of 161.7 % for the fourth quarter of 2013, compared to 155.57% in the prior quarter.

    A high Texas ratio does not guarantee failure, but the ratio is a good measure of a bank's ability to absorb future losses. SNL defines the adjusted Texas ratio as nonperforming assets plus loans 90 days or more past due - excluding delinquent government-guaranteed loans and other real estate owned covered by loss-sharing agreements with the FDIC - divided by tangible equity plus reserves. Institutions that reported a negative tangible equity are excluded from the analysis.

    Eastside Commercial Bank reported an adjusted Texas ratio of 1,030.75% at the end of the fourth quarter of 2013, the highest among all U.S. banks and thrifts. The undercapitalized bank reported a $2.7 million decrease in adjusted nonperforming assets and a $1.03 million decrease in tangible equity during the fourth quarter, resulting in an adjusted Texas ratio increase by 26.63 percentage points quarter over quarter.

    First City Bank of Florida posted the second-highest adjusted Texas ratio in the fourth quarter at 639.12%, an increase of 29.73 percentage points over the third quarter. The bank posted a loss of $423,000 in the fourth quarter, and its tangible equity fell by $502,000 quarter over quarter.

    First South Bank reported an adjusted Texas ratio of 512.75% at Dec. 31, 2013, down 152.03 percentage points from the end of the third quarter, the largest decrease among the top 30 banks and thrifts by adjusted Texas ratio at year-end 2013. First South's adjusted nonperforming assets fell by $6 million quarter over quarter. At the other end of the spectrum, AztecAmerica Bank's 112.86 percentage point increase in its adjusted Texas ratio was the largest among the top 30. The company's adjusted Texas ratio was 534.37% at the end of the fourth quarter.

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    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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