Long-term CD rates on the rise as CU-bank deals continue

The latest data from CD Valet suggests banks are increasing their efforts to retain long-term commitments for deposits. In December, 60-month CDs saw the highest interest rate increases in over a year compared with other shorter-term CDs. The company tracks information on some 530 certificates of deposit offered by more than 60 of its clients. Of all the CD increases in December, 15 percent were for 60-month CDs. The CD terms with the second- and third-most APY increases were 36 months and 24 months..Some bankers might find this tool interesting: https:// www.cdvalet.com/blog/best-cd-rates-by-state-map/ The URL leads to a website providing a map of the United States. By hovering over individual states, information about the best CD rate in that state is displayed. The tool includes rate information, paired with minimum deposit requirements. As of Jan. 12, best rates in the Upper Midwest ranged from 4.00 percent to 4.37 percent with minimum deposits ranging from $500 to $250,000.Credit unions and industry consolidationThere are a lot of public policy reasons to dislike acquisitions of banks by credit unions. First and foremost, they replace an income tax-paying business with an income tax-exempt entity. The Independent Community Bankers of America, which calls for limits on credit union acquisition powers seemingly every time one buys a bank, recently made three other points about the trend:• More than 80 percent of acquisitions since 2010 involved a credit union with more than $1 billion in assets, while more than 40 percent involved a credit union headquartered in a different state than the acquired bank.• In areas where community banks participated in Small Business Administration lending programs, SBA lending fell after nearly 80 percent of credit union acquisitions.• Total mortgage applications decreased in 57 percent of affected service areas following an acquisition, while the amount loaned per approved mortgage application decreased in 61 percent of acquisitions and mortgage denial rates increased in 61 percent of acquisitions.While I defend a bank owner’s right to sell to whomever they choose, I am bothered by billion-dollar financial institutions that grow by acquisition while maintaining their income tax exemption.Let me take this opportunity to add that industry consolidation is a troubling trend. M&A deals are always going to happen; investments only have value if investors can exit. The reason we have shrinking numbers of financial institutions is that we simply have so few de novos.Note that the FDIC approved only seven applications for insurance in 2025. (Only two were in the Midwest: Generations Community Bank of Indianapolis, and Erebor Bank, N.A. of Columbus, Ohio.) While I know there has been a rollback of some regulations affecting community banks recently, my real wish is that there would be a way to pass legislation that would make it easier to charter a new bank.