Loan-To-Deposit Ratio - LTD

AAA

DEFINITION of 'Loan-To-Deposit Ratio - LTD'

A commonly used statistic for assessing a bank's liquidity by dividing the banks total loans by its total deposits. This number, also known as the LTD ratio, is expressed as a percentage. If the ratio is too high, it means that banks might not have enough liquidity to cover any unforseen fund requirements; if the ratio is too low, banks may not be earning as much as they could be.

INVESTOPEDIA EXPLAINS 'Loan-To-Deposit Ratio - LTD'

In 2008, the FDIC reported that statewide LTD ratios in the United States ranged from a low of 56% in Utah to a high of 170% in North Dakota. The statewide ratios compare all loans to all deposits for all banks with their home base in that state. These ratios are used to determine whether a bank will be allowed to open or acquire a branch outside of its home state, and this ratio is often used by policy makers to determine the lending practices of financial institutions.

RELATED TERMS
  1. Loan-To-Cost Ratio - LTC

    A ratio used in commercial real estate construction to compare ...
  2. Branch Banking

    Engaging in banking activities such as accepting deposits or ...
  3. Liquidity Crisis

    A negative financial situation characterized by a lack of cash ...
  4. Deposit

    1. A transaction involving a transfer of funds to another party ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Liquidity

    1. The degree to which an asset or security can be bought or ...
Related Articles
  1. Home & Auto

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  2. Options & Futures

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  3. Retirement

    The Bright Side Of The Credit Crisis

    Find out how this tough economic period can be a learning experience for all.
  4. Fundamental Analysis

    How should a company budget for capital expenditures?

    Learn the difference between capital expenditures and operational expenses, and discover the importance of budgeting for capital expenditures.
  5. Fundamental Analysis

    What is accrual accounting in Oracle Apps?

    Learn more about Oracle Applications, an enterprise software system that enables businesses to streamline information systems – including accrual accounting.
  6. Fundamental Analysis

    Why do companies publish P&L statements?

    Understand the basics of the profit and loss statement, including why it is published and how it is used to assess financial stability.
  7. Investing Basics

    What is the first day of the quarter?

    Learn when the first day of the quarter is. Explore why investors and analysts prefer to compare results year-over-year due to seasonality.
  8. Investing Basics

    What is the difference between a quarter and a year in finance?

    Examine the difference between a fiscal quarter and a fiscal year. Learn why investors examine both quarterly and annual growth rates.
  9. Fundamental Analysis

    What is the first day of the first quarter?

    The first day of companies' fiscal years varies based on industry cycles. The timing is especially important because annual reports can have unexpected effects.
  10. Fundamental Analysis

    What is the first day of the second quarter?

    Learn about the fiscal year of different companies and when the second quarter begins. Explore why analysts often prefer to compare results year-over-year.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center