Datagy Reports 484 Banks Have a Texas Ratio Over 100% by the End of 2010

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Datagy provides insight into the Texas Ratio and how it can help identify banks with challenges ahead.

Number of Banks with a Texas Ratio over 100% by year- Datagy

Number of Banks with a Texas Ratio over 100% by year- Datagy

A Texas Ratio over 100 percent can, and often does, indicate potential bank survival problems.

Not many people are aware of the Texas Ratio, and its importance in determining bank health. The Texas Ratio is basically defined as questionable assets compared to capital plus loan loss reserves.

But is it effective?

According to Datagy, a provider of banking and financial software, twenty of twenty-three banks closed by the FDIC through March 23rd, 2011 had a Texas Ratio greater than 100%. In this installment of interesting facts about the “Texas Ratio” we chose to look only at those banks reporting a ratio over 100% as of December 31 2010. It is interesting that with 6,927 active banks in December 2010, 484 (453 In September) have a Texas ratio greater than 100%. The average ratio is actually in excess of 150 % at 158.34%.

It is also interesting to note that of the 484 banks that reported ratios over 100%, none in this group reported over 100% in 2006. The growth is primarily in the last two years, from 0 in 2006, 1 in 2007, 49 in 2008, 275 in 2009 and finally 484 in 2010. The average Texas ratio for this group follows the same pattern: 9.47 in 2006, 20.93 in 2007, 50.72 in 2008, 107.42 in 2009 and finally 158.34 in 2010.

Not only do 484 banks have a Texas ratio over 100% but, 167 had a ratio greater than 200%. A Texas Ratio over 100 percent can, and often does, indicate potential bank survival problems.

The team at Datagy provide banking and financial software, including FIREontheweb- accessible anywhere on your internet browser. We provide financial reporting and analysis, along with regulatory information and cutting-edge proprietary search-and-presentation tools. For more information on Datagy or the Texas Ratio, please visit Datagy.net or call (800) 463-1942.

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Eric McGehearty
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