20.7.3. Below are five of the ten liquidity indicators defined in Rose and Hudgins (the other five are Cash position, Liquid securities, Net federal funds and repurchase agreements position, Deposit brokerage index, and Loan commitments ratio).

• Capacity ratio = Net loans and leases divided by Total assets (-)
• Pledged securities ratio = Pledged securities divided by Total Assets (-)
• Hot money ratio = Money market assets divided by Volatile liabilities (+)
• Core deposit ratio = Core deposits divided by Total assets (+)
• Deposit composition ratio = Demand deposits divided by Time deposits (-)

If the Core deposit ratio unexpectedly dropped, this might be a red flag liquidity indicator. Put another way, the Core deposit ratio is a positive liquidity indicator such that its increase is generally favorable or indicative of a safer situation for the firm with respect to its liquidity needs. Negative liquidity indicators go in the opposite direction: their decrease is favorable while their increase might be cause for concern.

Among the five liquidity indicators listed above, in addition to the Core deposit ratio, which is a POSITIVE liquidity indicator; for which would an unexpected drop maybe be a yellow- or red-flag cause for concern?