Core deposit growth at U.S. commercial banks picked up in the first three quarters of 2025, rising by approximately 4%, compared to a growth rate of 1.5% during the same period in 2024. This increase is significant, especially as bank lending also saw an uptick in 2025, with banks relying on deposits to finance those loans.
Read More
Core deposits are understood to be stable, lower-cost funding sources that typically adjust more slowly during periods of rising interest rates. They primarily consist of funds from local customers who maintain a borrowing relationship with the bank.
Factors influencing the stability of core deposits include the insurance status of the accounts and the profile of the depositors. Core deposits encompass checking and savings accounts, money market deposit accounts, and fully insured certificates of deposit, specifically time deposits of $250,000 and under.
The 4.0% growth rate in 2025 marks an improvement from the 1.5% growth in 2024 and the negative growth observed in the first three quarters of 2023 and 2022. In 2021, core deposits surged by nearly 12% during the initial months after the COVID-19 pandemic as stimulus funds flowed into the banking system. However, some of these funds have since left the system, and now core deposits seem to be on the rise again.
Various factors drive deposit trends, including fiscal stimulus, interest rate changes, economic stability, and competition among deposit offerings. For instance, decreasing interest rates can enhance the attractiveness of bank products compared to other investments, potentially increasing deposits. Additionally, times of economic uncertainty often result in a “flight to safety,” where consumers and businesses prefer to keep their funds in banks.