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Loan-To-Deposit Ratio - LTD

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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 Says

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.

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