Deposits360°® Monthly Industry Review
- Andrew Mitchell
- 23 hours ago
- 3 min read
This month’s Review highlights emerging deposit trends and signals in Deposits360° Cross-Institution Analytics database and deposit pricing/volume models.
Same Cuts, Different Story
The Fed decreased its policy rate by 25bp at the end of September, bringing the total amount of easing to 125bp since its initial cut back in September 2024. The last time the Fed cuts rates by 125bp was between August 2019 and March 2020, at the onset of the COVID pandemic. When we consider how average deposit rates behaved during these two rate-easing cycles, we can see some stark pricing differences.
While CD portfolios adjusted quickly to Fed rate cuts in each cycle, the downward rate trajectory has been more pronounced in the current cycle. The current cycle began with a 50bp cut, and rates on CD Specials were quick to adjust downward. History suggests that CD portfolios may continue to reset lower even if the Fed pauses its easing.
On the non-maturity deposit side, pricing trends started similarly to how they started in the last easing cycle. However, beginning in Q1 this year, the rates on MMDA, savings, and premium rate checking accounts leveled off and began rising again. This was driven by two factors: 1) the belly of the yield curve (2-5 years) moved notably higher in Q4 of 2024, lifting asset yields and giving institutions more leeway to compete with price on the funding side; and 2) institutions leveraged premium-rate savings and checking accounts to grow/retain deposits and lure in maturing CD balances.
The following charts break out historical pricing trends by account type for Banks and Credit Unions.
Source: Darling Consulting Group Deposits360°®
Source: Darling Consulting Group Deposits360°®
Will non-maturity deposits stay anchored at current levels or begin to decline again in the face of continued Fed easing? Longer-term Treasury rates have declined steadily since January, lowering loan origination rates and putting additional pressure on institutions to manage margins through deposit pricing discipline. This may have a dampening effect on deposit rates moving forward. Up to this point, however, competitive rate offerings have remained anchored near 4.00% on the CD side, and between 2.50% and 4.00% among high-yield savings products.
Source: Darling Consulting Group Deposits360°®
Deposit Forecast and Budget Season
Looking beyond the Fed’s September rate cut, DCG’s forecasted pricing models are projecting that non-maturity deposit rates may decline by 2bp in a baseline scenario and 24bp if we see another 100bp dip over the next 12 months. However, maturing CDs may continue to either roll into lower-rate CDs or migrate into non-maturity deposits, benefitting deposit costs overall. At the Cross-Institution level, DCG’s pricing model is projecting total deposit cost savings of 15bp in a base scenario and 43bp in a Down 100bp scenario over the next 12 months.
Source: Darling Consulting Group Deposits360°®
With budget season upon us, institutions are forecasting how Fed rate cuts and lower deposit rates may impact deposit balances in 2026. DCG polled over 200 institutions in a recent webinar, asking what institutions are forecasting for growth. Most respondents fell within a band of 0% to 5% growth.
Source: Darling Consulting Group Strategy Webinar, n> 200
DCG’s deposit volume models are projecting that the recent trend of NMD growth may continue to outpace CD portfolio contraction, resulting in 4.5% total growth over the next 12 months in a baseline scenario. MMDAs and non-interest-bearing checking accounts are expected to see most of the expected balance increases at the Cross-Institution level, but institutions may see varying results depending on current mix and pricing strategy.
Source: Darling Consulting Group Deposits360°®
Deposits in Motion
Deposit balances are rising at the industry level, and so too are average account balances across the business and retail spaces. Average business account balances have seen a sharp increase over the last year, while retail deposits have been growing steadily since Q4 2023. In today’s battle for deposits, maturing CD specials and premium-rate savings accounts are pulling customers in every direction, leaving many institutions increasingly more concentrated in high-balance, single-account deposit relationships.
Source: Darling Consulting Group Deposits360°®
High-balance, single-account relationships is a metric that users can track in Deposits360°. DCG recommends that all institutions keep a close eye on changes to the deposit mix to ensure that management understands where concentration lies. As we head into the final leg of 2025, the top performers are tracking potentially volatile accounts, monitoring deposit flows, and strengthening relationships before balances walk out the door.
Darling Consulting Group will continue to monitor the Cross-Institution data in Deposits360° and bring you insights to help you navigate the current economic environment.
To learn more about how DCG's Cross-Institution Analytics can help drive strategic decision-making, click here.
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