Capital
Equity to Assets Ratio
Also known as Eq/Assets
The equity-to-assets ratio measures total shareholders' equity against total assets. It is the simplest possible capital measure: how much of every asset dollar is funded by equity vs. debt.
Formula
Total Equity Capital includes common stock, surplus, retained earnings, accumulated other comprehensive income, and qualifying minority interests. Total Assets is unadjusted total assets — no risk weighting, no goodwill stripping.
Why it matters
Often called the 'inverse leverage' metric — a 10% equity/assets ratio means the bank is 10× levered (every $1 of equity supports $10 of assets). It's the most accessible capital metric for non-specialists and a useful cross-check on the regulatory ratios.
How to interpret
Most US community banks report equity/assets between 9% and 12%. Larger banks tend toward 9–11% (more efficient capital structures); smaller community banks 10–14% (more conservative). The ratio should track the leverage ratio closely — large divergence indicates Tier 1 deductions (goodwill, DTAs) are material.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| ≥ 11% | Strong | Conservative equity funding. |
| 9–11% | Adequate | Normal range for US banks. |
| 7–9% | Watch | Approaching higher leverage. |
| < 7% | Concern | Highly levered. |
Worked example
Frequently asked
What is the difference between equity/assets and the leverage ratio?
Equity/assets uses gross book equity and gross book assets. The Tier 1 Leverage Ratio uses Tier 1 capital (which subtracts goodwill and certain deductions) and average assets (also adjusted). Equity/assets is typically 50–200bp higher than the leverage ratio at acquisitive banks.
Sources
- FFIEC Call Report Schedule RC (Balance Sheet)
See Equity to Assets Ratio across 4,336 US banks
BankRegReports ranks every FDIC-insured institution by equity to assets ratio, refreshed each quarter as new FFIEC filings land.