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2012-07-26

First State Bank ranked among safest in the nation

By Carolyn B. Edwards BCC Staff Writer

It may look like a small bank in a small town, but Bandera First State Bank recently made a prestigious list that ranks it among the safest banks in the entire country.

According to an article by Sara Glakas of InvestingAnswers posted on MSN.money, the Bandera bank was included in a list of 359 "safest banks in America."

Glakas said that people trust their banks to protect their money, despite the recent spate of giant bank failures. "We assume that everything will be fine if our bank fails. After all, the Federal Deposit Insurance Corp. insures our deposits up to $250,000. Why worry?"

Glakas says that due to the rash of bank failures, the FDIC's Deposit Insurance Fund "has been all but drained." Since 2008, more than 413 US banks have failed.

If you can't assume that the FDIC will always be there to cover your savings, it's wise to pick the safest bank you can find, Glakas advises.

Glakas used a special measurement, called the Texas Ratio, to determine the relative safety of banks. The ratio "was developed by a financial wizard at RBC Capital Markets named Gerard Cassidy, who used it to correctly predict bank failures in Texas during the 1980s recession, and again in New England during the recession of the early 1990s."

Glakas said, "While the ratio has been excellent at predicting bank failures, it can also be used to find the banks that are the furthest from failure."

The closer the Texas Ratio gets to zero, the lower the bank's risk of failure.

Of the 7,300 banks in America, only 359 achieved a perfect Texas Ratio of 0.0. Bandera First State Bank joined 57 other Texas banks in achieving that status.

First State Bank President Roy Thompson said, "We are pleased that our bank received this recognition, especially in these tough economic conditions, when safety and soundness of your local bank matters."

No banks qualified in Alaska, Hawaii, Maine, New Hampshire, South Carolina or Vermont.

Pictured: Bandera First State Bank received news this week that it had been ranked among the safest in the country.