Securities & Investments
Total Securities
Total securities is a bank's entire investment portfolio, held-to-maturity bonds at amortized cost plus available-for-sale bonds at fair value. It is typically the second-largest asset after loans and the bank's main liquidity reserve and interest-rate-risk position.
How is Total Securities calculated?
Schedule RC-B reports the portfolio by classification and instrument type. HTM bonds are carried at amortized cost and AFS bonds at fair value, so the total mixes two measurement bases, which is why the embedded unrealized losses matter when reading it. Equity securities with readily determinable fair values are reported outside Schedule RC-B (Schedule RC, item 2.c).
Why does Total Securities matter?
The securities book is where banks park deposits they haven't lent out, so it doubles as a liquidity buffer and a yield source. But it also concentrates interest-rate risk: a large, long-duration portfolio bought at low rates is exactly what generated the unrealized losses behind the 2023 turmoil.
How do you interpret Total Securities?
Read total securities as a share of assets and against the loan book. A bank with securities far above peers may be struggling to find loan demand or reaching for yield; the duration and the HTM/AFS split determine how much hidden rate risk the total conceals.
What do Total Securities levels indicate?
| Range | Label | Interpretation |
|---|---|---|
| Short-duration, liquid | Strong | Portfolio is a genuine liquidity buffer with little rate risk. |
| Typical | Adequate | Securities share roughly in line with peers. |
| Large / long-duration | Watch | Sizable book carrying meaningful unrealized-loss risk. |
| Outsized vs. capital | Concern | Embedded losses could threaten capital if liquidity forces sales. |
Worked example
Frequently asked
Why do banks hold so many securities?
Securities absorb deposits that exceed loan demand, provide liquidity that can be pledged or sold, and earn yield. They also help manage interest-rate risk, though bought at the wrong time they create it.
Does 'total securities' include trading assets?
Investment securities (HTM and AFS) are reported separately from trading assets, which are held for short-term resale and marked through income. Most community banks have no trading book.
Sources
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