Blog · Finance metrics and formulas · Banking
The investment-to-deposit ratio compares a bank's investment securities with its deposits. Work through two reporting dates, reconcile the underlying balances, and separate investment changes from deposit outflows.
The investment deposit ratio for banks is investment securities divided by total deposits at the same date. It compares a bank's securities portfolio with its deposit funding base. The result needs a clear investment definition and a balance movement check before it can support a treasury decision.
Investment-to-deposit ratio = Investment securities / Total deposits × 100
This article uses closing carrying values for available-for-sale and held-to-maturity debt securities, excluding trading positions. Deposits include all deposit categories within the same reporting entity. That is a stated management convention; a peer comparison must confirm that the other bank uses the same convention.
Securities and loans are separate asset categories. The Federal Reserve's H.8 release reports securities in bank credit separately from loans and leases, and shows deposits separately from borrowings. That distinction matters when mapping a balance-sheet export: a loan does not become an investment security merely because it earns interest, and wholesale borrowing does not become a deposit.
The ratio is also different from the investment income ratio, which addresses an income measure. Here the numerator is a balance at a date, not the interest or gains earned during a period. Do not annualize this balance-to-balance ratio.
Start with a securities position report, the deposit control report, and a balance-sheet export for each reporting date. Keep the bank entity, currency, account identifier, classification, measurement basis, and balance alongside each row. Preserve security identifiers if the position report supplies them; they make it easier to find duplicated holdings.
For this calculation, available-for-sale positions enter at their reported carrying values and held-to-maturity positions enter at their reported carrying values. Do not silently substitute market value for just one category. If management also wants a market-value sensitivity, present it separately with its own label and reconciliation.
Choose the deposit perimeter before calculating. Mixing consolidated securities with deposits from only one subsidiary creates an apparent concentration that comes from scope. Similarly, combining domestic deposits in one period with total deposits in another can move the ratio without any investment decision.
The following illustrative US bank reports the same categories on June 30 and September 30, 2026. All balances are USD, with no currency conversion. The securities report contains these four aggregate rows:
| Securities category and basis | June 30 balance (USD) | September 30 balance (USD) |
|---|---|---|
| Treasury securities, available-for-sale carrying value | 24,000,000 | 25,000,000 |
| Agency mortgage-backed securities, available-for-sale carrying value | 36,000,000 | 32,000,000 |
| Municipal debt, held-to-maturity carrying value | 10,000,000 | 11,000,000 |
| Other debt securities, available-for-sale carrying value | 5,000,000 | 6,000,000 |
| Included investment securities | 75,000,000 | 74,000,000 |
The deposit report has a separate set of rows:
| Deposit category | June 30 balance (USD) | September 30 balance (USD) |
|---|---|---|
| Noninterest-bearing deposits | 140,000,000 | 130,000,000 |
| Interest-bearing transaction and savings deposits | 100,000,000 | 95,000,000 |
| Time deposits | 60,000,000 | 55,000,000 |
| Total deposits | 300,000,000 | 280,000,000 |
The calculation follows directly from those totals:
| Step | June 30 | September 30 |
|---|---|---|
| Sum included securities | 24,000,000 + 36,000,000 + 10,000,000 + 5,000,000 = 75,000,000 | 25,000,000 + 32,000,000 + 11,000,000 + 6,000,000 = 74,000,000 |
| Sum deposits | 140,000,000 + 100,000,000 + 60,000,000 = 300,000,000 | 130,000,000 + 95,000,000 + 55,000,000 = 280,000,000 |
| Divide securities by deposits | 75,000,000 / 300,000,000 | 74,000,000 / 280,000,000 |
| Investment-to-deposit ratio | 25.00% | 26.43% |
Percentages are rounded to two decimal places after calculation. The securities portfolio declined by $1,000,000, yet the ratio increased by 1.43 percentage points because deposits declined by $20,000,000. Calling that increase a securities purchase would misread both reports.
First, reconcile each summed balance to its corresponding balance-sheet control. The securities sum must equal the included securities accounts; the deposit sum must equal the deposit liability control. Any excluded investment account belongs in an explicit reconciliation line, rather than disappearing from the report.
The reverse checks are useful too: 25.00% × $300,000,000 equals $75,000,000. For September, use the unrounded fraction, 74,000,000 / 280,000,000, when multiplying back. The displayed rounded percentage is for reading, not for proving an exact dollar tie.
Then split the change in a fixed order. Hold June deposits constant while changing securities, and only then change deposits:
| Movement bridge | Calculation | Effect on ratio |
|---|---|---|
| Securities change, June deposit base | (74,000,000 − 75,000,000) / 300,000,000 × 100 | −0.33 percentage points |
| Deposit change, September securities | (74,000,000 / 280,000,000 − 74,000,000 / 300,000,000) × 100 | +1.76 percentage points |
| Total change | 26.43% − 25.00% | +1.43 percentage points |
The bridge uses full precision before rounding. Its allocation depends on the order chosen, so use that order consistently. The total change does not depend on the order.
The next action is to investigate the deposit movement, using a deposit flight by relationship review where relationship balances are available. The ratio alone cannot tell whether the withdrawals were concentrated, planned, or seasonal.
Read the loan-to-deposit ratio alongside this measure, using the same deposit base. Together they describe two major asset uses relative to funding, but they do not trace individual deposit dollars into particular assets. Cash, borrowings, capital, and other balance-sheet lines still matter.
Treasury owns the funding interpretation; finance owns the tie to reported balances. The securities team should explain valuation changes, purchases, maturities, sales, and pledged positions. A portfolio decline caused by market valuation has a different meaning from a maturity that generated cash.
There is no universal target supplied by this formula. For national banks, the OCC's Investment Securities handbook addresses investment holdings, applicable limitations, and risk management. A simple investment-to-deposit percentage does not replace that review or demonstrate compliance with a regulatory requirement.
Bring your securities report, deposit balances, and reporting-date definitions in an uploaded file; Covirage maps the columns, and its tools compute and check the figures. The external AI model explains the result with every figure traced to its rows. Create a free Covirage account and bring a sample of your own data.
See Covirage for commercial banking for the supporting business context.
Use the investment securities included in your documented reporting policy, such as available-for-sale and held-to-maturity debt securities. Identify the carrying-value basis for each category. State explicitly whether trading positions or other investments are excluded so comparisons use the same perimeter.
Not by itself. The ratio does not show maturities, market values, pledges, or how quickly securities can generate cash. A higher result may also arise when deposits leave. Review the underlying securities and funding changes before drawing a liquidity conclusion.
For a reporting-date balance-sheet comparison, use closing balances for both. An average-balance version can support a different management question, provided both sides use compatible averaging. Label that version clearly and do not compare it directly with closing-balance ratios.
No. Investment-to-deposit compares securities with deposits, while loan-to-deposit compares loans with deposits. Read them together to understand asset allocation against the same funding base, but keep their numerators separate and explain any differences in scope.