---
title: "Liquid Assets Ratio: definition, formula, and thresholds"
description: "The liquid assets ratio measures cash and readily marketable securities as a percentage of total assets. The on-balance-sheet cushion a bank can tap quickly to meet deposit outflows without fire-selling loans."
canonical_url: https://www.bankregreports.com/glossary/liquid-assets-ratio/
source: BankRegReports
category: "Liquidity & Balance Sheet"
units: "%"
schedule: "Schedule RC"
---

# Liquid Assets Ratio

> The liquid assets ratio measures cash and readily marketable securities as a percentage of total assets. The on-balance-sheet cushion a bank can tap quickly to meet deposit outflows without fire-selling loans.

## Formula

```
Liquid Assets Ratio = (Cash + Unpledged Marketable Securities) / Total Assets
```

Cash and balances due from depository institutions plus unencumbered, marketable securities, divided by total assets. BankRegReports serves it on the UBPR page 10 basis: cash and balances due, investment securities, fed funds sold and reverse repos, less pledged securities, over total assets. Trading assets are excluded.

## Why it matters

The 2023 regional-bank failures were liquidity events: solvent-looking banks could not meet rapid uninsured-deposit outflows. The liquid assets ratio is a first-order gauge of how much a bank can pay out before it must borrow or sell loans at a loss.

## How to read it

Higher is safer but lower-yielding. Most banks run 10–25%. Below ~8% a bank is thinly cushioned and depends on wholesale borrowing in a stress; read alongside the uninsured-deposit ratio and wholesale-funding ratio to judge true liquidity resilience.

## Thresholds

| Range | Reading | What it means |
|---|---|---|
| > 20% | Strong cushion | Ample on-hand liquidity for stress outflows. |
| 10–20% | Adequate | Normal range for most commercial banks. |
| 5–10% | Thin | Limited buffer; reliant on borrowing under stress. |
| < 5% | Concern | Minimal on-hand liquidity; high run-risk sensitivity. |


## Worked example

A $7 billion bank holding $400 million of cash and $750 million of unpledged securities has roughly $1.15 billion of liquid assets, a 16% liquid assets ratio, a comfortable buffer for normal conditions.

## Questions

### Why did liquidity matter so much in 2023?

Silicon Valley Bank and others failed when uninsured depositors withdrew faster than the banks could raise cash, forcing securities sales at large unrealized losses. A higher liquid assets ratio (especially in unpledged, short-duration securities) reduces that vulnerability.

### Do pledged securities count as liquid?

No. Securities pledged as collateral (for example, to the FHLB or for public deposits) are encumbered and cannot be sold to raise cash, so a careful liquid assets measure excludes them.

## Sources

- [FFIEC Call Report Schedule RC (Balance Sheet)](https://www.ffiec.gov/sites/default/files/data/reporting-forms/FFIEC031_FFIEC041_202606_i.pdf) (PDF)
- [FFIEC UBPR Liquidity section](https://www.ffiec.gov/data/ubpr)

## Related metrics

- [Uninsured Deposit Ratio](https://www.bankregreports.com/glossary/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 Silicon Valley Bank failure in 2023, it captures deposit base run-risk.
- [Wholesale Funding Ratio](https://www.bankregreports.com/glossary/wholesale-funding-ratio/): The wholesale funding ratio measures total borrowings (federal funds purchased, repurchase agreements, FHLB advances, other borrowed money and subordinated debt) as a percentage of total assets, the share of the balance sheet financed by borrowed money rather than deposits. A broader "reliance on wholesale funding" measure, which adds brokered and other non-core deposits over total funding, is served separately.
- [Loans-to-Assets Ratio](https://www.bankregreports.com/glossary/loans-to-assets/): The loans-to-assets ratio is total loans and leases as a percentage of total assets. It measures how much of a bank's balance sheet is committed to lending versus securities, cash, and other assets.
- [HTM Unrealized Losses](https://www.bankregreports.com/glossary/htm-unrealized-losses/): HTM unrealized losses are the gap between the amortized-cost carrying value of a bank's held-to-maturity securities and their lower current market value. The loss is disclosed but not recognized on the balance sheet, a hidden hit to economic capital.

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