Liquidity & Balance Sheet
Loan-to-Deposit Ratio
Also known as LTD
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 deploying its core funding into lending vs. holding liquid securities.
Formula
Total loans is gross loans (before the allowance for credit losses). Total deposits is all deposit liabilities (demand + savings + money market + time, both insured and uninsured).
Why it matters
LTD is the classic liquidity indicator. Low LTD (under 60%) indicates the bank holds substantial liquidity buffer in securities and cash. High LTD (over 95%) indicates aggressive deployment that may require non-deposit funding (FHLB advances, brokered deposits) to meet loan demand.
How to interpret
Most US community banks report LTD between 65% and 90%. The industry has been gradually de-leveraging — LTD has fallen from ~80% to ~70% since 2007. Banks above 100% are funding loans with non-deposit sources, a more rate-sensitive and lower-quality funding mix.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| < 70% | Low | Liquidity-rich; conservative deployment. |
| 70–90% | Normal | Typical community bank range. |
| 90–100% | Elevated | Aggressive deployment; check non-deposit funding. |
| > 100% | High | Loans exceed deposits; wholesale-funding reliance. |
Worked example
Frequently asked
Why isn't a higher LTD always better?
High LTD means the bank is fully deploying deposit funding into loans — which is profitable but liquidity-thin. A LTD above 100% means loans exceed deposits, requiring wholesale funding (FHLB advances, brokered deposits, repo) that's rate-sensitive and can dry up in a crisis.
Sources
- FFIEC Call Report Schedule RC
See Loan-to-Deposit Ratio across 4,336 US banks
BankRegReports ranks every FDIC-insured institution by loan-to-deposit ratio, refreshed each quarter as new FFIEC filings land.