Deposits360°® Monthly Industry Review
- Andrew Mitchell
- 2 days ago
- 2 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.
Feeling the Squeeze
Elevated geopolitical and economic uncertainty has resulted in market expectations that the Fed will sit on its hands for the remainder of 2026 and perhaps well into 2027. Without further rate cuts, institutions may struggle to squeeze a material amount of cost out of their deposit portfolios. Over the last month, portfolios have only harvested about 2bp of cost savings. Meanwhile, as the yield curve has flattened out to the 5-year point of the curve (i.e., has become less inverted), so too have longer-term CDs begun to creep higher and closer to shorter-term offering rates.
Source: Darling Consulting Group Deposits360°®
While growth at the beginning of 2026 was negligible at the Cross-Institutional level, there was close to 1% growth in February, which can be attributed to seasonal NMD inflow. Based on historical trends, there is typically a temporary bump in deposit flows in February and March, followed by outflow in April to coincide with the tax deadline. Time deposits, on the other hand, have not seen meaningful growth since Q4 of 2024.
Source: Darling Consulting Group Deposits360°®
CD Slowdown
At the industry level, NMD growth continues to outpace CD growth, causing the overall portfolio mix to trend back toward allocations observed in the years leading up to the COVID pandemic. Depositors are favoring liquidity over the relatively small incremental yield that may be gained by locking funds into time deposits. Some institutions have continued to grow CD portfolios, but they have done so by remaining competitive in CD Specials and, hence, have not benefited from the same cost reductions that other institutions have.
Source: Darling Consulting Group Deposits360°®
CD customers have become somewhat sleepy in the current environment, with less movement occurring at maturity compared to 2025. In fact, the rate at which maturing CDs have been rolling over into like products has been increasing over the last 12 months. Additionally, attrition levels have moved steadily lower over the same period. Many institutions have been able to capture a meaningful amount of their maturing CD dollars within the non-maturity deposit portfolio.
Source: Darling Consulting Group Deposits360°®
Looking Ahead
DCG’s deposit volume models project continued NMD growth over the next 12 months, with a baseline growth forecast of 6%. Time deposits, on the other hand, may see modest levels of outflow over the course of the year, dampening overall net growth expectations for total deposit portfolios. DCG expects only about 4% growth if the Fed keeps its policy rate at the current level. If inflation forces the Fed to move rates higher, growth would be reduced even further. However, if the rate-cutting cycle continues, growth would likely increase as more depositors seek the safety and liquidity of non-maturity products.
Source: Darling Consulting Group Deposits360°®
Darling Consulting Group will continue to monitor the Cross-Institution data in Deposits360° and bring you insights to help you manage your deposit base.
To learn more about how DCG's Cross-Institution Analytics can help drive strategic decision-making, click here.
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