 |
Definition of 'Texas Ratio'
A ratio developed by Gerald Cassidy and other analysts at RDC Capital Markets to measure the credit problems of particular banks or regions of banks. The Texas ratio takes the amount of a bank's non-performing assets and loans, as well as loans delinquent for more than 90 days, and divides this number by the firm's tangible capital equity plus its loan loss reserve. A ratio of more than 100 (or 1:1) is considered a warning sign.
|
 |
Investopedia explains 'Texas Ratio'
The Texas ratio was developed as an early warning system to identify potential problem banks. It was originally applied to banks in Texas in the 1980s and proved useful for New England banks in the early 1990s. This ratio can be useful when an asset held on a bank's balance sheet is falling in value, such as with oil reserves or mortgage assets.
|
-
This measure can help investors spot potential trouble in a bank's financials. Find out how.
Read More »
-
Break down the walls around researching financial instutions' financials.
Read More »
-
Discover how banks and financial institutions use economic capital to enhance risk management.
Read More »
-
-
Make an informed decision about your investments with these easy equations.
Read More »
-
In weaker economic times, banks may be tested by the government to see how safe they are.
Read More »
-
Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
Read More »
-
Search and compare the best checking and savings rates nationwide from Bankrate.com. Click Here!
|
|
