The number of U.S. banks and thrifts with an adjusted Texas ratio above 100% continued to shrink in the first quarter, ticking to 16 from 22 in the fourth quarter of 2018.
This was the 33rd straight quarter without an increase in the number of institutions above the 100% mark since 482 banks and thrifts reported an adjusted Texas ratio above 100% in the fourth quarter of 2010.
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 FDIC — divided by tangible equity plus reserves. Institutions that reported negative tangible equity are excluded from the analysis.
Barboursville, W.Va.-based First State Bank posted the highest adjusted Texas ratio in the country at 654.5% as of March 31, 2019, which constitutes a 31.3-percentage-point improvement from the prior quarter. Fort Walton Beach, Fla.-based First City Bank of Florida posted the second-highest adjusted Texas ratio in the country, at 574.5%, following a 10.9-percentage-point increase during the three-month period.
Philadelphia, Pa.-based United Bank of Philadelphia moved to the No. 3 spot, as its adjusted Texas ratio climbed 41.6 percentage points to 266.0%.
Across the U.S. banking industry, the median adjusted Texas ratio was only 5.6% at the end of the first quarter of 2019.
Did you enjoy this analysis? Click here to set up real-time alerts for data-driven articles on the U.S. financial sector.
Click here to access an Excel template that allows you to analyze asset quality and other financial metrics.
Click here for a template showing adjusted Texas ratios for all operating banks and thrifts that filed call reports.