2024 Core Deposit Intangibles Update
Since Mercer Capital’s most recently published article on core deposit trends in September 2023, deal activity in the banking industry has continued to be rather anemic, but could be showing signs of recovery. Although deal activity has been slow, we have seen a marginal uptick in core deposit intangible values relative to this time last year.
On July 26, 2023, the Federal Reserve increased the target federal funds rate by 25 basis points, capping off a collective increase of 525 basis points since March 2022. Although cuts to the fed funds target rate were anticipated several times over the past year, no changes materialized until the Federal Reserve’s September 2024 meeting. While many factors are pertinent to analyzing a deposit base, a significant driver of value is market interest rates. All else equal, lower market rates lead to lower core deposit values. As shown below, the yield curve for U.S. Treasuries has shifted downward relative to last year at this time, and the market expects further downward movement in short-term rates in the near term. ...
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