KBRA Financial Intelligence

Bank Auto Lending Rebound Faces Hurdles on Price Hikes

Auto loan holdings among U.S. banks increased on a year-over-year (YoY) basis for the first time in more than two years in 2Q 2025. Although growth continued to trail the expansion of total lending across all categories, the auto segment’s recovery may signal building momentum just as financing rates have begun to fall. New Federal Reserve data show the average rate on a new 60-month auto loan at 7.6% in August—the lowest since February 2023 and down from a series high of 8.4% one year earlier.

This rate is likely to have fallen even further throughout September, as the 10-year U.S. Treasury yield ended the month approximately seven basis points (bps) lower than at the start of the month. Although lower financing costs could make buying more attractive, the drop in rates has been partly offset by gains in sticker prices. The latest two Consumer Price Index (CPI) releases indicate that new and used motor vehicle prices posted month-over-month (MoM) increases in both July and August. While these vehicles remain around 0.6% cheaper than they were at their February 2025 peak, a continued retrenchment of earlier price hikes could dampen the appeal of purchasing a new or used vehicle.

Though North American auto manufacturers had been feeding rising inventory levels, the latest Bureau of Economic Analysis (BEA) data show a marked shift in August’s vehicle production, which fell sharply to a seven-month low. Meanwhile, inventories of vehicles manufactured in North America posted their first decline since March, falling from a 2025 peak. This reduced supply—along with 10% to 25% tariffs on all cars built outside the U.S. and additional duties on many parts used in vehicles built domestically—may be playing a role in the recent price gains across the auto sector.

Though sales figures from the BEA suggest that the sales rate for automobiles and light trucks is trailing its pre-tariff level, they’ve remained above the three-month moving average in both July and August. That trend may support the continued expansion of auto financing into 3Q 2025 if sales stay resilient through September.

The average auto loan delinquency rate among U.S. banks has receded for two consecutive quarters but remained above the five-year moving average for the sixth time in the past seven quarters.

September 2025 M&A

Wichita, Kansas-based Equity Bancshares, Inc. (NYSE: EQBK) (KFI Score: B+) announced in a September 2 press release that the parent of $5.4 billion Equity Bank (KFI Score: B) will acquire Frontier Holdings, LLC, the parent company of Omaha, Nebraska’s Frontier Bank (KFI Score: B). The cash and stock transaction, valued at approximately $122.8 million, marks Equity’s entry into Nebraska and adds seven branches. Frontier reported $1.4 billion in assets as of June 30, 2025. The deal is expected to close in 4Q 2025.

Greenville, Illinois-based Bradford Bancorp, Inc., parent of the $632.8 million commercial bank subsidiary The Bradford National Bank of Greenville, announced in a September 2 press release that it will acquire the $91.2 million State Bank of St. Jacob (KFI Score: B-) of St. Jacob, Illinois. Financial terms were undisclosed; the parties indicated an anticipated closing in early 2026.

Pittsburgh, Pennsylvania’s The PNC Financial Services Group, Inc. (NYSE: PNC) (KFI Score: B), parent of $554.6 billion PNC Bank, National Association (KFI Score: B), announced in a September 8 press release that it will acquire FirstBank Holding Company (KFI Score: B+) of Lakewood, Colorado and its $26.8 billion commercial bank subsidiary, FirstBank (KFI Score: B). The cash-and-stock transaction is valued at approximately $4.1 billion and is expected to close in early 2026.

Denver, Colorado-based National Bank Holdings Corporation (NYSE: NBHC) (KFI Score: B+), parent of $10 billion NBH Bank (KFI Score: B), announced in a September 15 press release that it will acquire Vista Bancshares, Inc. and its $2.4 billion commercial bank subsidiary Vista Bank (KFI Score: B+) of Dallas, Texas. The cash-and-stock transaction is valued at approximately $369.0 million and is expected to close in 1Q 2026.

Gainesville, Florida’s $895.5 million Radiant Credit Union (KFI Score: B) announced in a September 15 press release that it plans to acquire $151.8 million First Coast Community Credit Union (KFI Score: B) of Palatka, Florida. The exact timing of the deal’s expected completion was undisclosed but will be subject to regulatory and member approvals.

Blytheville, Arkansas’ $563.8 million FM Bank & Trust (KFI Score: C-) announced in a September 17 press release that it will consolidate several commonly owned community banks—First Missouri State Bank in Poplar Bluff, Missouri (KFI Score: B); First Missouri Bank of SEMO (KFI Score: B) in Kennett, Missouri; Piggott State Bank in Piggott, Arkansas; and First Missouri State Bank of Cape County (KFI Score: B+) in Cape Girardeau, Missouri—ranging in size between $214.9 million and $265.5 million across Northeast Arkansas and Southeast Missouri under a single charter and the FM Bank & Trust brand. The consolidation will begin in October and continue throughout 2026.

Dubuque, Iowa’s $2 billion Fidelity Bank & Trust (KFI Score: B-) announced on September 22 that it intends to acquire $53.4 million Frost State Bank (KFI Score: B-) of Frost, Minnesota, as well as $80.5 million State Savings Bank (KFI Score: B-) of Rake, Iowa. Transaction type and value were not disclosed; timing is subject to regulatory approval.

Quakertown, Pennsylvania-based QNB Corp. (OTCQX: QNBC) (KFI Score: B+), parent of $1.9 billion QNB Bank (KFI Score: B), announced in a September 23 press release that it will acquire The Victory Bancorp, Inc. (OTCQX: VTYB) and its $477.2 million commercial bank subsidiary The Victory Bank (KFI Score: B) of Limerick, Pennsylvania. The all-stock transaction is valued at approximately $41.0 million. Closing is expected in 1Q 2026.

Lenexa, Kansas’s $5.8 billion CommunityAmerica Credit Union (KFI Score: B+) announced in a September 24 press release that it plans to acquire $3.5 billion UNIFY Financial Credit Union (KFI Score: B) of Allen, Texas. The proposed deal’s expected closure date was undisclosed but will be subject to member and regulatory approvals.

Harrisburg, Pennsylvania-based Mid Penn Bancorp, Inc. (Nasdaq: MPB) (KFI Score: B), parent of $6.3 billion Mid Penn Bank (KFI Score: B), announced in a September 24 press release that it will acquire 1st Colonial Bancorp, Inc. (OTCPK: FCOB) and its $876.4 million commercial bank subsidiary 1st Colonial Community Bank (KFI Score: B) of Mount Laurel, New Jersey. The cash-and-stock transaction is valued at approximately $101.0 million and is expected to close in 2Q 2026.

Ballston Spa, New York-based Ballston Spa Bancorp (OTCPK: BSPA), parent of $912.6 million Ballston Spa National Bank (KFI Score: B), announced in a September 24 press release that it will acquire NBC Bancorp, Inc. and its $521.8 million commercial bank subsidiary The National Bank of Coxsackie (OTCPK: NCXS) (KFI Score: B) of Coxsackie, New York. The cash and stock transaction, worth $26 million, is expected to close in 2Q 2026.

Olympia, Washington-based Heritage Financial Corporation (NASDAQ: HFWA) (KFI Score: B), parent of $7.1 billion Heritage Bank (KFI Score: B), announced in a September 25 press release that it will acquire Olympic Bancorp, Inc. and its $1.7 billion commercial bank subsidiary Kitsap Bank (KFI Score: B) of Port Orchard, Washington, in an all-stock transaction valued at approximately $176.6 million. The transaction is expected to close in 1Q 2026.

Muncie, Indiana-based First Merchants Corporation (NASDAQ: FRME) (KFI Score: B-), parent of $18.6 billion First Merchants Bank (KFI Score: B-), announced in a September 25 press release that it will acquire First Savings Financial Group, Inc. (NASDAQ: FSFG) and its $2.4 billion commercial bank subsidiary First Savings Bank (KFI Score: B) of Jeffersonville, Indiana, in an all-stock transaction valued at approximately $241 million. The deal is expected to close in early 2026.

St. Cloud, Minnesota-based Stearns Bank, National Association (KFI Score: D), a subsidiary of Stearns Financial Services, Inc. (KFI Score: C+), announced in a September 26 press release that it will acquire $385.2 million One American Bank (KFI Score: B) of Centerville, South Dakota. Transaction value and expected close date were not disclosed.

Arlington, Virginia’s Arlington Community Federal Credit Union (KFI Score: B) announced in a September 30 press release its intent to merge with CommonWealth One Federal Credit Union (KFI Score: C+) of Alexandria, Virginia, with the combined organization to operate under the CommonWealth One name. The proposed deal’s expected closure date was undisclosed.

In Case You Missed It

Follow KFI’s blog for our latest research, data analytics, and product updates. Read our insight pieces on 10,000 banks, credit unions, and more. Some of our recent analysis highlights include the following:

Trump Admin May Transform Banking Outlook With Fed Board and CFPB in Limbo

Mortgage Rates Reach 2025 Low as Residential Lending Lags

KFI’s Quarterly Banking Overview: 2Q 2025

Fed Set to Shape Bank Profits With Rate and Economic Outlook

Farm Lending Growth Slows Amid Federal Subsidy Surge