2024 was a challenging year for many financial institutions. Short-term interest rates remained stable but higher during the first half of the year, resulting in persistently higher funding costs. This combined with an inverted yield curve pressured net interest margins.
Although deposit balances began to stabilize from the outflows experienced in 2023, the annual growth rate was still below 3% across the industry. The result was higher demand for wholesale funding at wider spreads, offsetting some of the benefits of rate cuts in 3Q and 4Q.
We begin 2025 with a more favorable interest rate backdrop, with the Fed having cut rates by 100bps and a return to a steeper yield curve, but a less certain view toward the economy and future monetary policy decisions, leading to higher volatility.
Many institutions may be wondering how to position themselves to drive meaningful funding cost relief while balancing the ability to retain deposits and support loan growth. While we can’t know with certainty how things will unfold, the good news is that last year provided extremely valuable information.
Join this informative session hosted by R&T Deposit Solutions and Darling Consulting Group designed to help financial institutions navigate today’s complex deposit and balance sheet challenges. We’ll explore notable insights and projections from DCG’s Deposits360°® database – including nationwide balance/rate trends, best practices for planning for future rate paths, lessons learned over the last year, and more.
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