Bank Health by State
Courtesy of bmoreland
The Texas Ratio has become the de facto way of gauging a bank’s health. By aggregating banks by geography and calculating a weighted average Texas Ratio for each geographic region we can gain a understanding of what things look like on a more global scale.
There are several definitions of the Texas Ratio, but the quick and dirty is taking a bank’s Adjusted Nonperforming Assets and dividing them by Tangible Equity and Loan Loss Reserves. I modified mine somewhat to include Restructured Loans in the Adjust NPAs due to my experience working in a collection shop at Wells Fargo. A full definition of all the components can be found here.
The following analysis used FDIC Call Report data from the 1st Quarter 2010 and was at the Bank Certificate level. I only looked at insitutions below $2 billion in assets to avoid the large multi-state banks. Please note that there is no way to get a “true” peformance by state, the best we can do is try to get an approximation by looking at “community banks”.
The ten worst states:
A Texas Ratio above 75 is a close approximation of what gets a bank on the FDIC Watch List. Anything above 50 is considered “troubling”.
The ten best states:
Yeah, a sample size of 11 or 18 isn’t much to get excited about, but Massachusetts at 15.83, New Jersey at 19.40 and Texas at 19.92 are pretty impressive numbers.
A crappy map for the Lower 48:
A full listing of the states can be found in the Research Lab at BankRegData.com. The Lab is on the middle right of the home page and contains a handful of PDFs that you are free to download, use and distribute. These are quick analysis that I’m putting together to determine if I’m going to build web pages for.
A final teaser: the top 30 bank markets sorted descending on Texas Ratio:
Must say I’m a little shocked that you’d put Detroit & Seattle in the same sentence when discussing the worst markets in the U.S.
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