What's Different About Today's Rising Rate Environment?

It is easy to generalize what rising interest rates mean to a financial institution’s risk management plan, but the current rising rate environment is somewhat different and has a few unique features that may alter risk management decisions for banks and credit unions.

That’s the assessment of Chris Mills, Managing Director-Analytics at MountainView Financial Solutions, a Situs company, and Director of Analytics Della Zheng.

In MountainView’s recent webinar “Liquidity Risk and Your Deposits in a Rising Rate Environment,” which is now viewable on-demand, Mills and Zheng outlined some of the key reasons institutions need to take a more strategic approach to deposit management and look closely at how interest rates uniquely impact an institution’s behavior.

According to Mills and Zheng, the current situation does not mirror past rising rate environments. In the webinar, the two presenters offer a range of data points, graphs and macro trends to showcase the key differences in the current rate environment and discuss the implications for banks and credit unions. A few areas highlighted include:

  • The significant growth of total deposits and non-maturity deposits (NMDs) over the past 10 years;

  • The lag in NMD rates (broken out by credit unions and banks);

  • Changes to the funding mix and implications to your balance sheet strategy;

  • How the increase in non-interest bearing deposits affects an institution’s liquidity risk and earnings;

  • How regulations, technology and demographics alter the future of deposits.

To access the details and better understand how this rising interest rate environment may alter your depositor’s behavior and an institution’s risk management plan, watch the on-demand webinar.