The Texas Ratio is a financial ratio that is used to measure the credit standing of banks or credit unions. It is a system that identifies early warning signs of problematic financial institutions regarding their credit. The ratio shows a comparison between a banks tangible common equity capital and its total troubled loan portfolio (Non-performing [...]
Who are the U.S. Financial Regulatory Agencies, and What Do They Do? The financial system in the United States has a number of regulatory bodies designed to protect consumers and make sure that the system continues to work efficiently. Understanding who these regulators are, and what they do, is important. These bodies set the rules [...]
Total Bank Equity Capital consists of retained earnings, common and perpetual preferred stock, and other accumulated income but does not include non-controlling (minority) interest in consolidated subsidiaries (if you did include this you would have Total Equity Capital). Total Bank Equity Capital in simple terms is a broad measure of Equity Capital that does not [...]
Goodwill is an intangible asset for both banks and credit unions, and can be most easily explained as an asset which can’t be invested or generate any revenue for the business. It is calculated by deducting the total purchase price of the assets as compared to their actual market value. Whenever a bank, or credit [...]
A Non-performing loan is a loan where the borrower has failed to make the agreed upon scheduled payments based on the loan agreement. In simple terms, a loan that is nearing a default or is already defaulted is referred to as a non-performing loan. After the loan reaches the non-performing state, the probability of its [...]
Two of the options you have when sending money electronically are ACH transfer and wire transfer. Deciding which to use most often depends on how quickly you want the money to 'arrive' at its destination. What is an ACH Transfer? Many of us are familiar with automated clearing house (ACH) transfers in the form of [...]
One of the main types of insurance that you are expected to buy is homeowners insurance (homeowners policy). If you buy a home with a mortgage you will have to get homeowners insurance, and even if you buy a home with cash you should insure it. Homeowners insurance is designed to protect you from the [...]
When considering the health of your bank, one of the items to review is the number of non-performing loans that appear on the bank’s balance sheet. Non-performing loans can cause problems for banks, and even threaten their overall health. What are Non-Performing Loans? Non-performing loans are those that borrowers are no longer making payments on. [...]
The Net Worth Ratio is a measure of the capital strength of a credit union. The formula is calculated below: Net Worth (Retained Earnings) / Total Assets Where the numerator in the formula is retained earnings (this consists of regular reserves and undivided earnings of the credit union) and the denominator is the credit unions [...]
In our last article we covered the differences between getting pre-approved and pre-qualified for a mortgage. If you're actively looking for a mortgage pre-approval is what you should be looking for. Below we cover the steps for getting pre-approved and what you need to know to increse your chances of getting approved. Buying a home [...]
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