The decay rate is an analytical term used to describe the manner in which non-maturity deposits (NMDs) run off or “mature” over time as members leave the institution for whatever reason—relocation, a job transfer, retirement, dissatisfaction with service, and so on. A decay rate of 25%, for example, means that 25% of the beginning balances in a particular account such as shares will be permanently withdrawn in the first year. In the second year 25% of the remaining balances will be withdrawn and this process continues until the balance is zero. These simulated, hypothetical cash flows produce an average maturity that is used when valuing non-maturity deposits.  A decay rate of 25% implies an average maturity of four years.