Zain Tariq

The increase in full-year estimates marks a reversal as analysts lowered loan growth numbers earlier in 2025.

Banks' earnings should remain healthy through the first half of the year, buoyed by continued margin expansion, steady loan growth and benign credit quality. Earnings growth could prove more challenging in the second half of 2025 as the lagging impact of tariffs slows growth, weighs on the consumer and pushes delinquencies higher.

More banks are racking up frequent losses, while the cumulative net loss at credit unions has jumped in recent periods.

US banks' net interest margins are poised to expand as funding costs move lower, while earning assets mature and are replaced with higher-yielding loans and securities. But the Trump administration's broad suite of tariffs will serve as an overhang on the economy, drive credit costs higher and prevent earnings from growing in 2025.

US community bank earnings are set to rise in 2025 and 2026 as higher net interest margins will trump increases in credit costs. Modest decreases in interest rates will allow community banks to decrease their deposit costs.

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.

In recent quarters, loans backed by nonowner-occupied commercial real estate properties have underperformed at banks larger than $100 billion in total assets.

Community bank earnings tested but not crushed by commercial real estate II

US banks' net interest margins should trough soon, but higher-for-longer interest rates mean significant expansion lies further out on the horizon. Bank credit quality will also deteriorate further, j

Bank liquidity and the value of deposits remain at the forefront for most community bankers. Even as the Federal Reserve ends its tightening cycle and pivots to trimming rates, the focus on deposits s

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

Deposits remain firmly in focus, 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 fun

Pressure on community banks' net interest margins will persist as institutions continue to prize deposits.

The delinquency ratio for loans on nonowner-occupied commercial real estate (CRE) properties surpassed the ratio for owner-occupied properties in 2022, and continued to rise throughout 2023.

Since Square and SoFi had their charter applications approved in 2020, no financial technology companies managed to get an industrial loan company or Office of the Comptroller of the Currency national charter by going through the application process.

Banks’ deposit costs rose at a rapid clip in the fourth quarter, but a few institutions avoided the pressure by opting to let funds walk out the door in search of higher rates.