At the end of June, 16 U.S. banks and thrifts posted an adjusted Texas ratio above 100%, unchanged from the first quarter, but down from 27 in the second quarter of 2018.
A high Texas ratio does not necessarily imply potential failure, but the ratio is a good measure of a bank's ability to absorb future losses. S&P Global Market Intelligence 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 Federal Deposit Insurance Corp. — divided by tangible equity plus reserves. Institutions that reported negative tangible equity are excluded from the analysis.

Barboursville, W.Va.-based First State Bank once again had the highest adjusted Texas ratio in the nation at 715.8% as of June 30. The bank has posted losses in each of the last seven quarters and 17 of the past 20 quarters.
Fort Walton Beach, Fla.-based First City Bank of Florida, with the second-highest adjusted Texas ratio at the end of June at 613.0%, received a buyout offer from a group of investors in February. If completed, First City Bank will be the second Fort Walton Beach-based bank with a very high Texas ratio to be acquired in less than two years following Beach Community Bank's sale in July 2018.
Two banks — Monterey County Bank and United Bank of Philadelphia — fell below the 100% Texas ratio mark in the second quarter, while two other banks — City National Bank of New Jersey and Kansas-based Almena State Bank — breached the threshold.
United Bank of Philadelphia's adjusted Texas ratio plummeted to 87.9% as of June 30 from 266.0% at the end of March after the company received a $2.5 million grant from the Philadelphia Industrial Development Corp. United Bank is one of a dwindling number of black or African American designated banks and thrifts left in the U.S.

With four banks above the 100% adjusted Texas ratio mark, Georgia was the only state in the nation to have multiple banks above the threshold at the end of June.

Click here to access an Excel spreadsheet showing adjusted Texas ratios for all U.S. banks and thrifts that filed call reports.
