Glossary
Banking Metrics Glossary
Definitions, formulas, supervisory thresholds, and worked examples for 25 of the financial metrics analysts and bank board members use to evaluate US banks. Every metric is sourced from FFIEC call report schedules and the relevant federal regulatory guidance.
Capital
7 metrics
Common Equity Tier 1 Capital Ratio
The CET1 ratio measures a bank's highest-quality capital — common equity, retained earnings, and qualifying disclosed reserves — against its risk-weighted assets. …
Tier 1 Risk-Based Capital Ratio
The Tier 1 Risk-Based Capital ratio measures a bank's Tier 1 capital — CET1 plus Additional Tier 1 instruments — against its …
Total Risk-Based Capital Ratio
The Total Risk-Based Capital ratio measures a bank's total qualifying capital — Tier 1 plus Tier 2 instruments — against its risk-weighted …
Tier 1 Leverage Ratio
The Tier 1 Leverage Ratio measures Tier 1 capital against average total assets — unlike the risk-based capital ratios, it does not …
Tangible Common Equity / Tangible Assets
TCE/TA measures common shareholders' equity excluding goodwill and intangibles, divided by total assets excluding the same. It is the purest measure of …
Equity to Assets Ratio
The equity-to-assets ratio measures total shareholders' equity against total assets. It is the simplest possible capital measure: how much of every asset …
AOCI Burden
AOCI Burden measures unrealized losses on available-for-sale and held-to-maturity securities relative to a bank's tangible common equity. It quantifies the gap between …
Asset Quality
6 metrics
Texas Ratio
The Texas Ratio compares a bank's potential credit losses (non-performing assets + real-estate-owned) to its loss-absorbing capacity (tangible common equity + loan …
Non-Performing Loans Ratio
The NPL ratio measures loans past due 90+ days or in non-accrual status as a percentage of total loans. It is the …
Non-Performing Assets Ratio
The NPA ratio extends NPL to include other real estate owned (OREO) — property the bank has foreclosed on — as a …
Net Charge-Off Ratio
The Net Charge-Off ratio (annualized) measures loans actually written off as uncollectible (less subsequent recoveries) divided by average loans outstanding. It is …
Allowance for Credit Losses / Loans
ACL/Loans measures the bank's reserve for expected credit losses as a percentage of total loans. Under the CECL (Current Expected Credit Loss) …
Loan Loss Coverage Ratio
The coverage ratio measures the bank's loan loss reserve against its non-performing loans. It answers: how many times over could the bank's …
Profitability
6 metrics
Return on Average Assets
Return on Average Assets measures net income against the bank's average total assets over the period. It is the single most-watched profitability …
Return on Average Equity
Return on Average Equity measures net income against the bank's average shareholders' equity. It is the most-watched profitability metric for equity investors …
Net Interest Margin
Net Interest Margin measures net interest income (interest earned minus interest paid) against average earning assets. It is the core spread the …
Yield on Earning Assets
Yield on Earning Assets measures gross interest income as a percentage of average earning assets. It is the asset-side input to net …
Cost of Funds
Cost of Funds measures the bank's total interest expense as a percentage of average interest-bearing liabilities. It is the liability-side input to …
Efficiency Ratio
The Efficiency Ratio measures non-interest operating expense against net revenue (net interest income + non-interest income). It answers: how many cents of …
Liquidity & Balance Sheet
6 metrics
Loan-to-Deposit Ratio
The Loan-to-Deposit Ratio measures the bank's loans outstanding as a percentage of its deposit base. It captures how aggressively the bank is …
Core Deposit Ratio
The Core Deposit Ratio measures 'core' deposits — generally non-time-deposits below the FDIC insurance limit — as a percentage of total deposits. …
Uninsured Deposit Ratio
The Uninsured Deposit Ratio measures deposits above the $250K FDIC insurance threshold as a percentage of total deposits. Made infamous by the …
Commercial Real Estate Concentration Ratio
The CRE Concentration Ratio measures commercial real estate loans (construction + non-owner-occupied CRE + multifamily) as a percentage of total risk-based capital. …
Construction Loan Concentration
The Construction Loan Concentration measures construction, land, and land development loans as a percentage of total risk-based capital. The 2006 interagency guidance …
Brokered Deposits Ratio
The Brokered Deposits Ratio measures deposits placed through deposit brokers as a percentage of total deposits. Heavy reliance on brokered deposits is …
Data sources: FFIEC call report schedules, FDIC institution directory, federal regulatory guidance. Definitions are editorial and updated as accounting standards or supervisory thresholds change. See /data-updates/ for the current data freshness window.
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