Today is the two-for day as we have two topics to discuss:
The first topic is the plethora of economic data. These are a few of the titles that we saw this week:
• First-time jobless claims fell to the lowest levels since 1969.
• Worker shortages, rising costs hemming in U.S. economy, Fed’s Beige Book finds.
• U.S. housing starts tumble in June.
The economy keeps expanding at a strong pace. It is hard to find people to fill vacancies and build houses.
The second topic is about deposit betas (yes, we are technical today). The following stories were released on S&P Global Markets:
• Comerica deposit rates up significantly with a beta of 68% in the second quarter. Their cost of funds went up 17 basis points in the second quarter.
• The Bank of the Ozarks deposit rates were up significantly with a deposit beta of 84% in the second quarter. Their cost of funds is up 21 basis points in the second quarter.
Our incredible ALM team maintains similar data for all McQueen clients and decided to do a little investigating. They found higher non-maturity deposit costs for McQueen clients, but the change was much lower; on average a 7 basis point rate increase. This highlights the significant changes in the deposit market today.
What I take from this is that community financial institutions will have a need to increase deposit rates in the third quarter to remain competitive.
Are you prepared for rising deposit costs? Contact your advisor to discuss ways to grow deposits in this competitive market. All of us at McQueen Financial are dedicated to your long-term success.
Have a great day.