The Texas Ratio: The One Number That Predicts Bank Failure

Описание: What if I told you that there is a single number, one simple calculation, that has predicted virtually every major bank failure in American history? What if I told you that this number was used by sophisticated investors to avoid Silicon Valley Bank months before it collapsed, to sidestep Signature Bank before depositors lost access to their money, to exit First Republic while everyone else was still believing management's reassurances? This number exists. It has been used by Wall Street insiders, hedge fund managers, and banking analysts for over four decades. And yet most Americans have never heard of it. They have no idea that they could calculate this number themselves in less than five minutes using publicly available data. They have no idea that this single metric could tell them whether their bank is safe or sliding toward the abyss. Today, I am changing that forever.

The Texas Ratio was developed during the 1980s savings and loan crisis by analyst Gerard Cassidy. The formula is elegantly simple. Non-performing assets divided by tangible common equity plus loan loss reserves. The result tells you how much of a bank's safety cushion has been consumed by problem loans. A ratio below fifty percent indicates health. Above one hundred percent indicates probable failure. When backtested against every bank collapse in modern history, the Texas Ratio identified virtually every institution that failed before the failure occurred.

In this video, I reveal exactly how to calculate the Texas Ratio yourself, the current ratios of banks making headlines, why Warren Buffett uses this same logic, and the step-by-step process to evaluate whether your bank is safe or in danger.

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