Deposits remain firmly in focus for community banks, even with interest rates expected to fall in the second half of 2024. Customers continue to shift funds into higher-cost products and demand higher rates for their funds, while regulators are encouraging banks to hold more liquidity, leading to pressure on net interest margins. That pressure will eventually subside but be replaced by higher credit costs. While many community banks will maintain attractive returns, others will seek to improve their situation through efficiency programs or by partnering with another institution.
