Wednesday, August 5, 2020

Puerto Rican Banks and the Texas Ratio

I don't know how the banks in Puerto Rico manage to make profits considering the volume of Nonperforming assets on their books. There may also be a reason why pretty much all major US banks do not have a branch in Puerto Rico. 

I think PenFed is the only bank I know of that has banks in both the mainland and Puerto Rico.

As of 2020 Quarter 2, they are as follows:

First Bank - 30.10

To put this in perspective, the average across all banks is currently 7.11. We'll most likely see that number increase drastically since people probably stopped paying their May payment. Give it until Q3 and Q4 to see the 90 day delinquencies show up as Non-Performing Assets.

Bank v. Peers · Current Quarter Yearly

Rest of Nation · All OTHER Banks · Current Quarter Yearly

When you look at the Puerto Rico banks' past ratios, it gets extremely high. FirstBank, for example, had numbers above 100 which means they had more Nonperforming Assets in volume than their Tangible Equity + Loan Loss Reserves. IndyMac collapsed at around 140 or 112 depending on how you calculate the ratio.

The three Puerto Rico banks I mentioned TODAY have Texas Ratios that are at or above the average of all banks, at the worst of their defaults in 2010, 30.61.

Due to FDIC Insurance, I don't think I have any risk of losing the money completely, but should the banks go under receivership, it could cause the funds to be inaccessible for months while the bank transitions to new ownership. Sometimes it's smooth. Other times, it will be months. Because it's Puerto Rico, consider it to NOT be smooth, and for it to take double or triple what it would take Stateside.


  1. The FDIC insured amounts are available within a few days...the amounts in excess are what take forever to deal with and depend on whether another bank takes the accounts

    1. Thansk for your comment. My digging got me to this discovery.