Loan-to-Deposit RatioLDR
The loan-to-deposit ratio (LDR) is a bank’s total loans divided by its total deposits. It shows how much of the money customers have deposited the bank has lent out, and it is a quick read on both liquidity and how hard the balance sheet is working.
How it is calculated
LDR = total loans ÷ total deposits. First Community Bank in South Carolina, for example, reported $1.61 billion in loans and $2.01 billion in deposits at September 30, 2026, a loan-to-deposit ratio of about 80%, according to its earnings release (see our First Community profile).
What high and low ratios signal
A low ratio, say under 70%, means much of the deposit base sits in securities or cash, which is safe but earns less. A ratio near or above 100% means the bank is lending out more than it gathers in deposits and relies on borrowings, brokered deposits or other wholesale funding to fill the gap, which costs more and can be less stable. Many community banks aim for somewhere in the 80% to 90% range.
Why deposits limit loan growth
For a bank near the top of its range, the constraint on new lending is not demand, it is funding. Each new loan has to be matched by a new deposit or by more expensive borrowed money. That makes deposit gathering, and how easily a new customer can open and fund an account, a direct input into how much a bank can lend.
Common questions
What is a good loan-to-deposit ratio?
Many community banks target roughly 80% to 90%. Lower ratios leave earnings on the table; ratios near or above 100% mean the bank depends on more expensive, less stable funding.
Can a loan-to-deposit ratio be over 100%?
Yes. It means the bank has lent more than its deposits and funds the difference with borrowings or other wholesale sources.