Still weird to me. Even with that reasoning, deposits can be lent out to make money. Loans might not be paid back. I would think a bank with $100 in deposits and $50 in loans is better off than a bank with the reverse.
Your intuition is correct to some degree - if you imagine I go down to the bank and deposit $50 in cash, that deposit is both an asset and a liability to the bank (it expands both sides of the bank's balance sheet by $50). It's an asset in that the bank now owns $50 of paper notes, and it's a liability in that the bank now owes me $50.
The bank can then choose to loan out those paper notes to someone else, and therefore you're entirely correct that it can be lent out to make money, however the bank can't lend out the fact they now owe me $50 (that's just a liability to them).
The cash backing the deposits has already been lent out to create the $56 million in assets that they are also receiving.
1) Assets make the bank money (loans. interest collected), liabilities lose money (deposits. interest paid).
2) Deposits are loans the bank takes. (As in it has to pay interest to service the "debt".)
In your example a bank with $100 in deposits is paying interest on $100, but only receiving interest on $50. In the reverse it is receiving interest on $100, but only paying interest on $50. So the reverse is much more profitable for the bank.
I get no interest on my checking account.
I remember back around 2005 I'd get 4% interest on my checking account. Feels bizarre now.
It is backwards from the normal business model, but that's because a banks business is to make money lending instead of borrowing to make money.
Say they then use that $50 to buy office paper (it's a small bank).
They then owe you $50 and have several thousand pieces of blank paper.
The thing you are tripping on is that the deposit doesn't necessarily represent something the bank actually has.
But if you wanna discuss the convention, in your example the $100 in deposits might vanish overnight (as in fact did in the case of SIVB) whereas the $50 loans is a LOT less volatile.