The Texas ratio is a measure of a

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

's credit troubles. The higher the Texas ratio, the more severe the credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculated by dividing the value of the lender's non-performing

asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...

s ( NPL + Real Estate Owned) by the sum of its

tangible common equity Tangible common equity (TCE), the subset of shareholders' equity that is not preferred equity and not intangible assets, is an uncommonly used measure of a company's financial strength. It indicates how much ownership equity owners of common stock w ...

capital and loan loss reserves. In analyzing

Texas Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...

banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among

New England New England is a region comprising six states in the Northeastern United States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It is bordered by the state of New York to the west and by the Canadian provinces ...

banks during the recession of the early 1990s.

References

External links

Current Texas Ratios for all US Banks and Credit Unions
* Current Texas Ratios for US Banks Updated May 21st 201

* Complete list of US banks and their Texas ratios as published i

and an updated listing published i

th

includes notes how the tables were created (that the ratio was multiplied by 100 for easier comprehension, etc.) Banking Credit Debt Financial ratios {{bank-stub