Deposits360°® Monthly Industry Review
- Andrew Mitchell
- 2 days ago
- 3 min read
This month’s Review highlights emerging deposit trends and signals in DCG's Deposits360° Cross-Institution Analytics database and deposit pricing/volume models.
Emerging Pricing Trends
The Fed has cut rates six times since September 2024, but depositors can still find premium rate CD offerings above 4.00%. This may not last much longer, however. With the latest Fed cut, CD offerings above 4.00% are more expensive than overnight wholesale borrowings.
Some meaningful decreases in short-term CD offering rates are starting to emerge in DCG’s Cross-Institution database, with 1- to 12-month offerings declining by about 10bp. This may be a sign that institutions are beginning to right-size their CD offering rates while competing for shifting balances with savings and money market products. The most competitive MMDA products (90th percentile within DCG’s database) have also moved between 12bp and 16bp lower over the last month.
Source: Darling Consulting Group Deposits360°®
These recent reductions to CD and MMDA products indicate that a behavioral shift may be taking place as we head into 2026. Up to this point in the falling rate cycle, CD pricing in general has been relatively sticky. Even MMDA pricing levels have not moved as aggressively as many institutions had forecasted or anticipated. In fact, if we consider the betas that have materialized since the Fed made its first rate cut (50bp) in September 2024, betas have lagged historical averages at many institutions.
Source: Darling Consulting Group Deposits360°® Cross-Institution Analytics database
There are a couple of reasons for the pricing stickiness up to this point. First, institutions became heavily reliant on CD Specials when the Fed was tightening in 2022 and 2023. These premium-rate offerings became a strategic focus for institutions looking to protect their liquidity levels at a time when depositors were actively repositioning savings balances to maximize yield. Many institutions have been deliberately slow to reduce or eliminate these offerings at the risk of seeing deposit outflows. Second, many institutions have either rolled out new MMDA products or repriced existing products to capture the CD balances that are now looking for more liquid options for their discretionary balances. This has kept MMDA pricing higher than some may have projected.
As CD pricing has moved lower over the past two years, the spread between CDs and MMDAs has narrowed, reducing the overall incentive for borrowers to ‘lock up’ funding in CD products.
Source: Darling Consulting Group Deposits360°®
Source: Darling Consulting Group Deposits360°®
While the spread is narrower at banks than at credit unions, it is likely to compress further in response to the Fed’s latest cut. The wildcard will be the extent to which the longer end of the yield curve might steepen. If the 1-year to 5-year points of the curve steepen, this may slow down an institution’s ability to reduce overall CD costs as longer-term product rates will start to move higher.
Balance Trends
As the spread between CDs and MMDAs narrows, a similar pattern has emerged with balances. Considering the total deposit portfolio allocation for each product type within DCG’s Cross-Institution database, CD balances are beginning to decline while MMDA allocation moves higher for each institution type. This reinforces this notion that depositors are valuing the liquidity that MMDAs provide and are willing to sacrifice some yield at the margin for the withdrawal option.
Source: Darling Consulting Group Deposits360°®
Source: Darling Consulting Group Deposits360°®
The market is currently pricing in two more rate cuts in 2026. If this scenario plays out, DCG forecasts balances to continue to flow back into non-maturity deposit portfolios.
DCG’s Deposits360° users are proactively leveraging the application’s price elasticity module to optimize MMDA pricing and simulate how incremental CD rate reductions will impact runoff in 2026. They are also looking at historical MMDA migration trends to see which customers moved funds as rates were rising, as these customers are prime targets for win-back campaigns.
Darling Consulting Group will continue to monitor the Cross-Institution data in Deposits360° and bring you insights to help you navigate the new year. We wish you great success in 2026.
To learn more about how DCG's Cross-Institution Analytics can help drive strategic decision-making, click here.
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