Direct Answer
Deposit growth measures how a bank's total deposits change over time, an indicator of customer trust and franchise strength. Deposit mix refers to the composition of those deposits -- non-interest-bearing and low-cost checking/savings accounts versus higher-cost time deposits (CDs) and wholesale funding. A bank with a higher proportion of low-cost, sticky deposits (sometimes called "core deposits") generally has a funding advantage that supports a higher net interest margin and more stability during periods of deposit competition or rate volatility.
Key Takeaways
- Deposit growth is a top-line trust signal. Rising total deposits commonly indicates customers are choosing to keep and add money at the bank; shrinking deposits can indicate customers moving funds elsewhere.
- Deposit mix is what growth is made of. The same growth rate can reflect very different underlying funding quality depending on whether it comes from low-cost checking/savings balances or from costlier CDs and wholesale funding.
- Core deposits are the low-cost, sticky layer. Non-interest-bearing and low-cost checking/savings balances are sometimes called core deposits because they tend to remain with a bank across rate cycles -- though the exact definition varies by bank and analyst.
- Mix quality supports net interest margin. A higher share of low-cost deposits generally gives a bank a funding-cost advantage that supports a higher net interest margin, all else equal.
- Mix quality matters most during stress. A deposit base weighted toward core deposits is generally more stable during periods of deposit competition or rate volatility than one weighted toward CDs and wholesale funding.
- Growth and mix should be read together, not separately. Growth without attention to mix can obscure a shift toward more expensive, less stable funding.
How Deposit Growth and Mix Are Measured
Deposit growth
Deposit growth measures how a bank's total deposits change over time. It is a straightforward change calculation applied to the total deposit figure a bank reports, typically compared year-over-year or quarter-over-quarter. Because deposits are the primary, lowest-cost funding source most banks use to make loans and buy securities, sustained growth in total deposits is commonly read as an indicator of customer trust and franchise strength -- customers are choosing to keep, and add to, their balances at that institution rather than moving them elsewhere.
On its own, however, the growth figure says nothing about what kind of deposits are driving it. That is what deposit mix addresses.
Deposit mix
Deposit mix refers to the composition of a bank's total deposits, split broadly into two categories:
- Low-cost, sticky deposits: non-interest-bearing checking accounts and low-cost interest-bearing checking/savings accounts. These are sometimes called "core deposits" because they tend to be stable across rate cycles and cost the bank little or nothing to hold.
- Higher-cost, less sticky funding: time deposits (certificates of deposit, or CDs) and wholesale funding, such as brokered deposits or borrowings from other institutions. These typically pay market-competitive rates and are more likely to move if a competitor offers a better rate.
A bank's deposit mix is generally expressed as the percentage of total deposits falling into each category. A bank with a higher proportion of low-cost, sticky deposits generally has a funding advantage: it can fund loans and securities at a lower average cost than a bank that relies more heavily on CDs and wholesale funding.
Why mix matters for net interest margin and stability
Net interest margin (NIM) is the spread between what a bank earns on its interest-earning assets and what it pays for its funding. Because low-cost core deposits cost little to hold while CDs and wholesale funding carry higher, often market-based rates, a bank's overall funding cost -- and therefore its NIM -- is directly shaped by its deposit mix, not just the total amount of deposits it holds.
Mix also matters for stability. During periods of deposit competition (banks raising rates to attract or retain deposits) or broader rate volatility, deposits concentrated in CDs and wholesale funding are generally more exposed to repricing pressure or outright departure than core deposits, which tend to stay in place through those same periods. A bank that must aggressively raise rates or lean on wholesale funding to maintain its total deposit level is showing a different kind of funding picture than one growing organically through low-cost balances.
Worked Example
Hypothetical example -- for education only.
Suppose a bank reports total deposits of $10.0 billion at the start of the year and $10.8 billion at the end of the year.
- Deposit growth: ($10.8B − $10.0B) ÷ $10.0B = 0.08, or 8.0% growth for the year.
- Breaking down the ending balance by category: non-interest-bearing checking, $2.0B; low-cost interest-bearing checking/savings, $5.0B; CDs, $2.5B; wholesale funding, $1.3B. These four categories sum to $2.0B + $5.0B + $2.5B + $1.3B = $10.8B, matching total ending deposits.
- Core deposits (low-cost, sticky): $2.0B + $5.0B = $7.0B, or $7.0B ÷ $10.8B = 64.8% of total deposits.
- Higher-cost funding (CDs plus wholesale): $2.5B + $1.3B = $3.8B, or $3.8B ÷ $10.8B = 35.2% of total deposits.
This bank shows solid headline deposit growth (8.0%), and roughly two-thirds of its ending deposit base sits in low-cost, core categories. An analyst comparing this bank to a peer with the same 8.0% growth rate but a core-deposit share of, say, 45% would generally view this bank's growth as higher quality: a larger share of the increase is funded by sticky, low-cost balances rather than CDs and wholesale funding that carry higher rates and can be more prone to moving.
Limitations and Common Mistakes
Looking at growth without checking mix
Total deposit growth alone can mask a shift toward more expensive funding. A bank can post attractive headline growth while that growth is concentrated in high-rate CDs or wholesale funding raised to offset departing core deposits -- a materially different, and generally less favorable, funding story than growth built on low-cost checking and savings balances.
Treating "core deposits" as a standardized, universal figure
What counts as a core deposit varies by bank and by analyst; there is no single, universal definition applied identically across every institution or disclosure. When comparing core-deposit ratios across banks. It is worth checking how each institution defines the category rather than assuming the figures are calculated the same way.
Ignoring the direction of rate cycles
Deposit mix quality that looks acceptable in a low-rate environment can deteriorate quickly during periods of rising rates or deposit competition, as customers move balances out of low-yielding checking/savings accounts and into higher-yielding CDs or competing institutions. A single snapshot of deposit mix does not capture how that mix might shift under different rate scenarios.
Comparing deposit growth across banks of very different sizes or business models without context
A smaller or newer bank may show a much higher percentage deposit growth rate simply because it is growing from a smaller base, not because its funding franchise is necessarily stronger. Deposit growth and mix are most informative when compared against a bank's own history and against peers of similar size and business model, rather than in isolation.
FAQ
What is the difference between deposit growth and deposit mix?
Deposit growth measures how a bank's total deposits change over time -- a top-line indicator of customer trust and franchise strength. Deposit mix looks inside that total at composition: how much sits in non-interest-bearing and low-cost checking/savings accounts versus higher-cost time deposits (CDs) and wholesale funding. A bank can grow deposits while its mix worsens (growth concentrated in expensive CDs), or hold deposits flat while its mix improves (low-cost balances replacing runoff of costly funding). The two measures answer different questions and are read together, not interchangeably.
What counts as a core deposit?
Core deposits are commonly described as the non-interest-bearing and low-cost checking/savings balances that tend to stay with a bank across rate cycles -- sometimes called "sticky" deposits. The exact line between a core deposit and other funding varies by bank and analyst, and definitions are not universal or standardized across institutions. In general, the more a bank's deposit base is weighted toward these low-cost, sticky balances rather than CDs or wholesale funding, the stronger its funding position is generally considered to be.
Why does deposit mix affect net interest margin?
Net interest margin is the spread between what a bank earns on loans and securities and what it pays for funding. Non-interest-bearing and low-cost checking/savings deposits cost the bank little or nothing to hold, while CDs and wholesale funding carry higher, often market-based rates. A bank with a higher proportion of low-cost, sticky deposits generally has a funding advantage that supports a higher net interest margin, because a smaller share of its funding base is paying competitive rates.
How is deposit growth calculated?
Deposit growth is typically calculated as the percentage change in total deposits between two periods: (ending total deposits minus beginning total deposits) divided by beginning total deposits, commonly measured year-over-year or quarter-over-quarter. It is a simple change-over-time calculation on the total deposit figure a bank reports; it does not, by itself, say anything about the composition of that growth, which is why deposit mix is examined alongside it.
Why might deposit growth be a warning sign instead of a positive one?
Deposit growth is commonly read as a sign of customer trust and franchise strength, but that reading depends on the mix behind it. Growth driven by a bank aggressively raising CD rates or leaning on wholesale funding to replace departing low-cost deposits can reflect competitive or funding pressure rather than franchise strength. Because deposit competition and rate volatility can pull a bank toward costlier funding sources, growth in the headline number and stability in the mix are both relevant to assessing funding strength -- neither alone tells the full story.
Where can I find a bank's deposit growth and deposit mix data?
A bank's 10-K and 10-Q filings, available through SEC EDGAR, disclose total deposits and typically break them out by category (non-interest-bearing, interest-bearing checking/savings, time deposits, and other borrowed/wholesale funding), often with average balances and rates paid. Bank regulatory data, including aggregate industry-level deposit figures, is also published by the FDIC and the Federal Reserve.
What is the difference between insured and uninsured deposits?
Deposit insurance covers balances up to a statutory limit per depositor, per insured institution, per ownership category, with amounts above that limit uninsured. Uninsured balances tend to be held by businesses and larger customers and have historically proved more rate-sensitive and more mobile under stress. Banks disclose an estimated uninsured deposit figure in their filings. A high uninsured share is not by itself a problem, but it changes how quickly a deposit base can move, which is why it is read alongside liquidity disclosures.
What are brokered deposits and why are they treated differently?
Brokered deposits reach a bank through a third-party intermediary rather than directly from a customer relationship. They can be raised quickly and in size, which makes them useful for funding growth, but they typically carry no relationship attachment and can leave when a better rate appears elsewhere. Supervisors have historically applied additional restrictions and reporting to them for that reason. A bank funding rapid loan growth largely through brokered deposits has a different stability profile from one growing core relationship balances.
How is deposit stickiness estimated when balances have no maturity date?
Checking and savings balances can be withdrawn at any time yet in practice stay for years, so banks model an assumed behavioural life rather than a contractual one. Those assumptions feed interest rate risk models and liquidity planning. They are estimated from historical decay behavior, which means they are calibrated on past rate cycles and past customer technology. A period in which moving money became faster or cheaper for customers can make previously reliable assumptions understate how quickly balances leave.
References
Disclaimer
This article is for educational and informational purposes only and does not constitute personalized investment, financial, or legal advice. Deposit growth and mix figures, and what counts as a core deposit, vary by bank and reporting period. Always verify current data from a bank's own filings and primary regulatory sources. Trading involves risk, including the possible loss of principal.