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Southwest Securities gets released from federal order

Wednesday, January 16, 2013 - 12:40pm

Fort Worth, TX (Fort Worth Business Press) -- Southwest Securities FSB has been released from the cease and desist order imposed by federal regulators almost two years ago to force the bank to shore up assets.

The Dallas-based bank has remained profitable while it brought in outside investors, reduced its classified assets and improved the credit quality of its loan portfolio.

"This important milestone demonstrates the effectiveness of our efforts to build Southwest Securities, FSB into a stronger, more diversified bank," said James H. Ross, president and CEO of SWS Group, the bank's parent company. "We remain focused on implementing our plans to expand the Bank's role as a leading lender throughout the markets we serve."

The Office of Thrift Supervision moved to force the bank to improve its credit risk management in February 2011 when $273 million of the bank's assets were classified as substandard.

Southwest sought outside investors to increase its capital ratios and by October 2011 had garnered a $100 million investment from Hilltop Holdings and Oak Hill Capital Partners for a 34 percent stake in the company SWS Group Inc. Hilltop Holdings is the holding company of Gerald Ford and Oak Hill Capital Partners was founded by Robert Bass and held $8 billion in committed capital at the time of the investment.

That and other efforts enabled Southwest Securities FSB to increase its Tier 1 core capital ratio to 12.7 percent, up from 9.4 percent and its total-risk based capital ratio to 19.2 percent, up from 14 percent. The value of classified assets has declined to just over $100 million.

"We are very pleased that the OCC has recognized the hard work our Bank team has done to reduce classified assets and improve the credit quality of our loan book while maintaining profitability," Ross said.

Southwest Securities FSB has 13 locations in Texas and New Mexico.

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