Wednesday, October 29, 2025 — Read today's Essential Intelligence about decarbonization strategies powered by artificial intelligence, historical economic lessons that inform current policies, and the implications of newly implemented automotive tariffs on industry dynamics.
US community banks' strong expansion in net interest margins has bolstered earnings in the first half of 2025, but the delayed impact of tariffs will surface in the coming quarters and slow loan growth and push credit costs higher.
Community banks' funding costs likely peaked in the third quarter as the Federal Reserve shifted toward lower interest rates, but these banks will struggle to lower deposit costs quickly due to their increased reliance on certificates of deposits (CDs) for funding.
Lower interest rates have supported stronger values in banks' deeply underwater bond portfolios and could spur more repositioning activity in the next few quarters.
Banks engaged in fewer restructuring trades and put less cash to work in the bond market in first quarter as rates remained higher for longer and institutions remained focused on maintaining liquidity
Banks engaged in fewer restructuring trades and put less cash to work in the bond market in first quarter as rates remained higher for longer and institutions remained focused on maintaining liquidity
While short-term interest rates seem to have peaked and the height of the liquidity crunch in 2023 is in the rearview mirror, bank liquidity and the value of deposits remain at the forefront for most
A number of banks have announced modest repositioning of their securities portfolios in the 2023 fourth quarter and more likely will come when announcing earnings for the period.
The outlook for capital markets has stabilized in recent months after experiencing considerable turmoil during the liquidity crunch that US banks faced earlier in 2023.
As deposit competition intensifies, banks should consider slowing or even stopping growth to mitigate credit risk and threats to their net interest margins, according to South State Bank Director of C
Facing substantial unrealized losses, banks sought to shield even larger portions of their securities portfolios from changes in market values in the third quarter of 2022.