Interest Expense on Domestic Deposits Increased 42% Last Year

​The following article was published in Banking Exchange today... "Big flip" coming in deposit costs? - Banking Exchange

Bankingexchange		remove preview
"Big flip" coming in deposit costs? - Banking Exchange The composition of banking industry funding has changed dramatically over the past 30 years. How will the dynamics of industry growth, digital technology, and interest rate changes impact bank financial performance? In the FDIC data below, notice the increase in non-interest-bearing deposits in the last ten years after decreasing in the prior decade. View this on Bankingexchange >

------------------------------
Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
------------------------------
-------------------------------------------
Original Message:
Sent: 03-13-2018 14:44
From: Neil Stanley
Subject: Interest Expense on Domestic Deposits Increased 42% Last Year

​The attached FDIC data reports that interest expense on domestic deposits increased 42% in 2017 compared to 2016.  Meanwhile Fed Funds rate has grown at an even faster pace.  This cost of $41.6 billion can be expected to grow significantly in 2018.  Given the anticipated depositor behaviors and the current trajectory of interest rates and composition of interest-bearing deposits where do you think interest expense will be by year-end?  How do banks need to address this major cost issue?

------------------------------
Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
------------------------------