Blog · Finance metrics and formulas · Banking
A bank balance sheet shows the assets a bank holds and the deposits, borrowings and equity that fund them. Compare two periods with a worked operating-bank example, mix ratios and reconciliation checks.
The balance sheet of a bank shows what the bank owns, what it owes and the equity left for its owners at a reporting date. Loans are assets and deposits are liabilities. To compare periods, reconcile both sides first, then measure whether lending, liquid assets and funding are changing at the same pace.
A business customer sees its bank deposit as an asset. The bank sees the same account as an obligation to that customer. Conversely, a customer's borrowing is the bank's loan asset because the customer owes principal and interest under the loan agreement.
The SEC's banking balance sheet presentation rule places loans among assets and deposits among liabilities, with separate disclosure of interest-bearing and noninterest-bearing deposits. That distinction makes the funding mix more useful than a single total-liabilities figure.
The basic identity is the same as for any balance sheet:
Assets = Liabilities + Equity
Net loans = Gross loans − Allowance for credit losses
The allowance is a deduction from loan assets. It does not mean cash has been put in a separate account. Keep its sign explicit so an import does not accidentally add it to gross loans.
Use the bank's supplied general-ledger balance sheet, loan summary and deposit funding report for the same closing dates. Keep the legal entity, consolidation scope and currency identical. A bank subsidiary's report cannot be compared directly with a holding company's consolidated report; consolidated balance sheets address that separate issue.
Each exported row should retain the reporting date, account identifier, account description, signed balance and reporting category. The loan report should identify whether balances are gross or net. The funding report should distinguish deposits from other borrowings and identify deposit categories consistently across dates.
These are closing balances, not a period's receipts or disbursements. Do not sum daily deposit balances to get a quarter-end liability. Select the closing snapshot and reconcile it to the ledger before calculating any ratios.
Consider fictional Pine River Commercial Bank, a US bank comparing June 30, 2026, with September 30, 2026. All amounts below are supplied closing balances in USD. Parentheses indicate a deduction; the example omits balance sheet categories the fictional bank does not have.
| Asset category | June 30 (USD) | September 30 (USD) | Change (USD) |
|---|---|---|---|
| Cash and balances at other banks | 120,000,000 | 100,000,000 | -20,000,000 |
| Securities | 180,000,000 | 190,000,000 | 10,000,000 |
| Gross loans | 720,000,000 | 800,000,000 | 80,000,000 |
| Less: allowance for credit losses | (12,000,000) | (15,000,000) | -3,000,000 |
| Premises and equipment, net | 12,000,000 | 13,000,000 | 1,000,000 |
| Other assets | 30,000,000 | 32,000,000 | 2,000,000 |
| Total assets | 1,050,000,000 | 1,120,000,000 | 70,000,000 |
The funding side uses the same dates:
| Liability or equity category | June 30 (USD) | September 30 (USD) | Change (USD) |
|---|---|---|---|
| Noninterest-bearing deposits | 200,000,000 | 210,000,000 | 10,000,000 |
| Interest-bearing deposits | 650,000,000 | 680,000,000 | 30,000,000 |
| Borrowings | 80,000,000 | 100,000,000 | 20,000,000 |
| Other liabilities | 20,000,000 | 25,000,000 | 5,000,000 |
| Equity | 100,000,000 | 105,000,000 | 5,000,000 |
| Total liabilities and equity | 1,050,000,000 | 1,120,000,000 | 70,000,000 |
For September, deposits are $210,000,000 + $680,000,000 = $890,000,000. Total liabilities are $890,000,000 + $100,000,000 + $25,000,000 = $1,015,000,000. Adding $105,000,000 of equity produces the reported $1,120,000,000 of assets.
Use the same denominator definition in both periods. The following ratios use closing balances and are rounded to two decimal places only after division.
| Measure | June calculation | June result | September calculation | September result |
|---|---|---|---|---|
| Net loans / assets | 708,000,000 / 1,050,000,000 | 67.43% | 785,000,000 / 1,120,000,000 | 70.09% |
| Gross loans / deposits | 720,000,000 / 850,000,000 | 84.71% | 800,000,000 / 890,000,000 | 89.89% |
| Equity / assets | 100,000,000 / 1,050,000,000 | 9.52% | 105,000,000 / 1,120,000,000 | 9.38% |
| Cash plus securities / assets | 300,000,000 / 1,050,000,000 | 28.57% | 290,000,000 / 1,120,000,000 | 25.89% |
Net loans are $720,000,000 − $12,000,000 = $708,000,000 in June and $800,000,000 − $15,000,000 = $785,000,000 in September. Lending represents more of the asset base, while deposits have not increased by the same dollar amount as gross loans.
That gives treasury a funding question, not an automatic conclusion about safety. Cash plus securities is a descriptive grouping here, not a regulatory liquidity measure. Securities differ in marketability, maturity and restrictions, and the loan-to-deposit calculation says nothing by itself about deposit stability.
The Federal Reserve's H.8 release also separates loans, securities, cash assets, deposits and borrowings. Its banking-system aggregates provide context; they are not the fictional bank's source data or a substitute for its own reconciled reports.
Both reporting dates must have a zero balance check: assets minus liabilities minus equity. Then the asset movement must equal the movement in funding and equity.
The asset bridge is −$20,000,000 + $10,000,000 + $80,000,000 − $3,000,000 + $1,000,000 + $2,000,000 = $70,000,000. The other side is $10,000,000 + $30,000,000 + $20,000,000 + $5,000,000 + $5,000,000 = $70,000,000.
These bridges prove the change in position. They do not trace individual cash transactions. For explanations of specific movements, use flux analysis and the relevant supporting ledger entries.
The controller owns classification and reconciliation. Treasury owns questions about funding composition and maturities. Credit teams explain loan balances and allowance movements. FP&A brings the reconciled views together without treating a growing balance sheet as evidence of higher earnings.
Bring your bank asset, loan and funding reports as a file or Google Sheet; Covirage maps the columns, and its tools compute the period comparisons and check the balance identities. The external AI model explains the results with every figure traced to its rows. Create a free Covirage account, which takes about a minute, then set up your business and bring a sample of your own data.
See Covirage for commercial banking for the supporting industry context.
A customer deposit creates an obligation for the bank to repay the customer under the account terms. It therefore belongs on the liability side. The cash the bank receives is an asset; the deposit obligation is the corresponding funding balance.
Reports may show gross loans and a separate allowance, or present net loans with supporting detail. Preserve both amounts when comparing periods. An allowance reduces the carrying amount of loans; it is not another funding liability or a cash reserve.
It is a simple accounting measure of the equity share of reported assets. Do not label it a regulatory capital ratio. Regulatory measures have their own definitions of eligible capital, deductions and asset exposure, which this basic balance sheet comparison does not reproduce.
It shows financial position at a date, rather than earnings over a period. Read income and expense reports alongside it. An increase in equity can include retained earnings, capital contributions and other movements, so the change alone does not establish operating profit.