TCE (tangible common equity)/RWA (risk-weighted assets) TCE/RWA Ratio is most commonly used to evaluate the capital strength of a bank. This parameter particularly helps investors and rating agencies to assess the value of a banking institution's core capital position minus intangibles and non-controlling interest. TCE equals shareholders equity (Total Equity Capital) minus intangible assets, preferred [...]
The Tier 1 leverage ratio is the ratio that is most strongly associated with the true amount of capital that is being leveraged and therefore is a good way to understand a banks current leverage. Tier 1 Leverage ratio defines the connection between a banks adjusted total assets (average total consolidated assets) and it's core [...]
The Modified Texas Ratio formula has been altered to take into account new rules that force banks to bring onto their balance sheet non-performing government-secured loans at face value, despite the value that they were acquired at or whether they are just being serviced by the bank. These non-performing government-secured loans are added into the [...]
Tangible Common Equity (TCE) is Total Equity Capital minus items that are either intangible or not controlled by common shareholders. To calculate the tangible common equity for banks: intangible assets, preferred equity, and minority interest are subtracted from the total amount of shareholders equity (Total Equity Capital). The resulting TCE value gives a conservative estimation of [...]
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 [...]
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 [...]
Tier 1 Capital Ratio (also called the Tier 1 Risk Based Capital Ratio) divides a bank's core equity capital by the total amount of its risk weighted assets (RWA). It is one of a handful of ratio that help bank regulators understand the capital adequacy of a bank.
It is the trend analysis of the Texas Ratio. The Texas Ratio Trend takes into account the change in a bank or credit unions Texas Ratio over a certain period of time (our Texas Ratio Trend measures quarter to quarter change) and shows whether the trend is rising (is bad) or declining (is good). The [...]
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