What is the deposits-to-assets ratio and what does it tell me?

The deposits-to-assets ratio measures the percentage of a bank's total assets funded by customer deposits. It tells you how much the bank relies on its most stable and cheapest source of funding, with most U.S. banks falling between 70% and 90%.

The deposits-to-assets ratio is calculated by dividing total deposits by total assets. A bank with $8 billion in deposits and $10 billion in total assets has a deposits-to-assets ratio of 80%. The remaining 20% of the asset base is funded by other liabilities (borrowings, subordinated debt, other obligations) and shareholders' equity.

This ratio matters because deposits are the foundation of how banks fund themselves. Whatever portion of assets isn't funded by deposits has to come from somewhere else, and those alternatives are almost always more expensive and less reliable.

Why Deposit Funding Matters

Not all funding sources are created equal. Customer deposits, especially checking accounts and regular savings accounts, tend to be both cheap and sticky. Non-interest-bearing checking accounts cost the bank zero in interest expense. Even interest-bearing savings and money market accounts are typically priced well below what a bank would pay on wholesale borrowings or long-term debt.

A high deposits-to-assets ratio signals a structural funding advantage. The bank is financing its loans and investments with low-cost, stable money from customers who maintain their accounts through habit and convenience, not because they're chasing the highest yield. That stability gives deposit-funded banks more predictable earnings and better margins than banks relying heavily on market-rate borrowings.

But the quality of deposits matters just as much as the quantity. A bank reporting 85% deposits-to-assets might look well-funded, but if a large share of those deposits are high-rate certificates of deposit or brokered deposits gathered through third-party networks, the funding advantage is weaker than the headline number suggests. When evaluating this ratio, it helps to also look at the bank's cost of deposits and the proportion of non-interest-bearing deposits in its mix.

Typical Ranges by Bank Type

For U.S. commercial banks, deposits-to-assets ratios typically range from 70% to 90%. Where a bank falls within that range often reflects its size, business model, and market access.

  • Community banks frequently operate at 80% to 90% or higher. Deposits are their primary funding source, and they generally have limited access to capital markets or large-scale wholesale borrowing. A well-run community bank with deep local relationships can maintain a very high ratio almost entirely from core deposits.
  • Regional banks usually fall in the 75% to 85% range. They have broader funding options than community banks but still rely heavily on their deposit franchises across multiple markets.
  • Large national banks and money center institutions may run ratios in the 65% to 80% range. Their lower ratios don't necessarily indicate weakness. These banks have sophisticated treasury operations and actively manage their funding mix using Federal Home Loan Bank (FHLB) advances, repurchase agreements, commercial paper, and senior unsecured debt.

A ratio below 70% warrants a closer look at what's filling the gap. Heavy reliance on wholesale funding isn't inherently bad, but it changes the bank's risk profile and makes its cost of funds more sensitive to changes in market interest rates.

Reading Trends Over Time

A single snapshot of the deposits-to-assets ratio is useful, but watching how it moves over several quarters tells a richer story. A declining ratio can signal several different situations, and not all of them are concerning:

  • The bank may be losing deposits to competitors offering higher rates, which is a genuine funding pressure.
  • The bank could be growing its loan book or securities portfolio faster than deposits are coming in, funding the gap with wholesale borrowings. This is common during periods of strong loan demand.
  • The bank might be deliberately diversifying its funding sources as it grows, which can be a sign of maturing treasury management rather than distress.

Conversely, a rising deposits-to-assets ratio generally signals strength. The bank is attracting more customer deposits relative to its balance sheet, reducing its dependence on outside funding. This typically lowers the bank's overall cost of funds and improves its liquidity position.

The context behind the trend matters. A bank whose ratio dropped from 85% to 78% over two years because it was aggressively growing commercial loans in a booming local economy is in a very different position than one whose ratio dropped because depositors moved their money to a competitor's higher-yielding accounts.

Practical Considerations When Using This Ratio

The deposits-to-assets ratio works best as a starting point, not a final verdict. A few things to keep in mind when using it:

Compare within peer groups. An 82% ratio at a community bank means something different than 82% at a large regional bank, because their funding alternatives and business models are so different. The ratio is most informative when you're comparing banks of similar size and type.

Pair it with cost of deposits and the loans-to-deposits ratio. The deposits-to-assets ratio tells you how much of the balance sheet is deposit-funded. Cost of deposits tells you what the bank is paying for those deposits. Loans-to-deposits tells you how aggressively the bank is deploying those deposits into loans. Together, these three ratios give a much more complete picture of a bank's funding health than any one of them alone.

Watch for sudden changes. A bank that has maintained a stable 84% deposits-to-assets ratio for years and suddenly drops to 76% deserves a deeper look at what happened, whether that's deposit outflows, a large acquisition funded with debt, or something else entirely.

Related Metrics

Related Questions

Key terms: Core Deposits, Deposits to Assets, Wholesale Funding, Brokered Deposits — see the Financial Glossary for full definitions.

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