That Texas Ratio

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I had recently written an article on local bank closures, so I was spending a lot of time looking at the FDIC’s list of recently failed banks. So, when Chris Brunner was nice enough to put together the Texas Ratios on banks based on 2nd Q data, I thought I’d have a look at the correlation.

Many of the banks with the highest ratios were closed back near the end of the second quarter, such as Vineyard Bank and Security Bank of North Metro. However, Corus Bank managed to survive into September. If we look at some of the banks with ratios betwee 200 and 300, we see more recent closings as with Partners Bank, Flagship National Bank, and Bank of Elmwood.

Southern Colorado National Bank, with a ratio of 139 was closed a few weeks ago. I now have my eye on Peoples National Bank of Colorado Springs which has a ratio of 95.


If we compare the FDIC’s list of recently closed banks to the Texas Ratio list, we do see that the Texas Ratio is helpful in highlighting some of the at-risk banks.

A glance at the list shows us that Corus Bank is near the top, and Corus has since been closed by the FDIC. Also on the list is Southern Colorado National Bank, and as I reported earlier, Southern Colorado National Bank was closed down on October 2nd. Before they were closed, Corus Bank had a Texas Ratio of 3179, and Southern Colorado National Bank had a ratio of 139.

If we continue, we also see that Hillcrest Bank Florida had a Texas Ratio of 286 before it was closed down last week. Other recently closed banks with ratios above 100 include First DuPage Bank (242), Riverview Community Bank (238), and Bank of Elmwood (180).

8:20 pm on October 26, 2009