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Deposits360°® Monthly Industry Review

Deposits360°® Monthly Industry Review

This month’s Review highlights notable trends and projections in DCG’s Deposits360°® Cross Institution Analytics database and deposit pricing and volume models.

Balance Trends


The market consensus on future Fed rate cuts has changed yet again over the last month. In January, the market was expecting six cuts in 2024. As of June 2024, that number is now one, with a rate cut expectation for the September 18th meeting. This higher-for-longer rate environment continues to impact deposit portfolio composition. CDs now comprise 26% of deposits in the DCG Cross-Institution dataset – the highest level in almost ten years! Still, the industry has not yet returned to allocation levels seen post-Financial Crisis, and DCG forecasting models are projecting that deposit portfolios will continue to become more heavily weighted in CD products as we enter the latter half of 2024.

Source: Darling Consulting Group Deposits360°®

The following chart shows how deposit allocations have changed for specific product types over the last 5+ years. Non-interest-bearing accounts and savings accounts have seen the sharpest balance declines in the current rising rate cycle. However, it appears that outflow rates for NIB checking, Savings, and MMDA accounts have begun to decelerate as the higher-for-longer rate environment persists.

Source: Darling Consulting Group, Deposits360°®

Lastly, the Deposits360° balance forecast model predicts that NMD portfolios will see another 6% runoff over the next 12 months in a base (static rates) scenario. If the Fed were to cut rates by 100bp, the runoff would be slightly mitigated. Some of the draw-down will likely move into CDs, and Deposits360° allows users to track these migrations and tailor future pricing decisions accordingly.

Source: Darling Consulting Group, Deposits360°®

Pricing Trends

The Deposits360° pricing model projects an additional 8bp of non-maturity deposit rate increases over the next 12 months if the Fed maintains its policy rate at 5.25%-5.50%. If there is a 100bp decrease in the Fed Funds rate, the model forecasts that NMD portfolio rates would move 4bp lower over 12 months. Many institutions have already executed strategic rate cuts before a Fed policy move to provide further incremental relief on total funding costs. 

Source: Darling Consulting Group, Deposits360°®

Although deposit costs continue moving higher on a month-over-month basis, the upward momentum is decelerating as total deposits increased by only 3bp. CD offering rates moved another 3bp lower this month and are now down 13bp over the last quarter. Pricing is lower for all terms shorter than 3 years. 3+ year CDs are seeing relatively small volumes, despite seeing price increases month-over-month. Money market accounts moved incrementally higher – particularly the large-balance tiers. The most competitive rates (90th percentile) for MMDA balances greater than $1M have reached 4.50% for the first time, highlighting that many institutions are choosing to retain large balances through MMDA products versus using CD Specials priced over 5.00%.

Source: Darling Consulting Group Deposits360°®

Pricing for newly opened 1 Year CD Specials is decreasing. We observe decreases in the most competitive Special rates (90th percentile) and the least competitive Special rates (10th percentile). If history is any indication, the decreases may represent a return to a more normal spread to 1Y FHLB Advance rates. This spread may widen further in the coming months, particularly if the Fed remains on wait-and-see status while institutions continue to strategically walk down their time deposit rates.

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 portfolio.

To learn more about how DCG's Cross-Institution analytics can help drive strategic decision-making, click here.


© 2024 Darling Consulting Group, Inc.


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