The Texas Ratio is one of the oldest and simplest gauges of bank stress. It answers a single question: how big is a bank’s pile of problem assets compared with the capital and reserves it has to absorb them?
The formula
We compute it from public FDIC call-report fields:
Texas Ratio = nonperforming assets ÷ (total equity + loan-loss allowance) × 100
The numerator is loans that are 90+ days past due or in nonaccrual, plus repossessed real estate. The denominator is the equity and loan-loss reserves that stand between those problem assets and depositors. A lower ratio is healthier.
How to read the value
| Texas Ratio | Plain-language read |
|---|---|
| Under 10% | Very low problem-asset load relative to the cushion |
| 10% – 30% | Modest; common and usually unremarkable |
| 30% – 70% | Elevated — understand why, alongside capital and earnings |
| 70% – 100%+ | Historically a stress zone |
Among the largest US banks on the Q1 2026 FDIC call report, the four biggest all sit comfortably low: JPMorgan Chase at 3.75%, Bank of America at 3.89%, Citibank at 2.88% and Wells Fargo at 6.43%. You can see the full lowest-Texas-Ratio ranking and the highest-Texas-Ratio ranking.
Where it breaks down
The ratio is only as good as the asset classification behind it. Some past-due assets are government-guaranteed or fully collateralised, so a high ratio doesn’t always mean high risk — a bank heavy in guaranteed student or government loans can show an inflated number. It also uses a single quarterly snapshot and treats all problem assets as equally risky.
That’s why our A–F grade blends the Texas Ratio with capital ratios, the nonperforming-asset ratio and return on assets rather than leaning on any one number. Read more in the full Texas Ratio explainer, or check a specific bank.
Informational only — not financial advice or a solvency opinion. FDIC insurance protects deposits up to $250,000 per depositor, per bank, per ownership category. Source: FDIC BankFind Suite, Q1 2026.