KBRA Financial Intelligence

KFI’s Quarterly Banking Overview: 3Q 2025

Welcome to KFI Insights’ monthly Viewpoint. In this edition, we highlight the following key topics:

• KFI provides a concise overview of recent changes to critical asset, income, and funding metrics within the U.S. banking sector, as well as our proprietary KFI Scores.

• Mergers and acquisitions (M&A) activity among U.S. lenders slowed slightly in November, with 12 deals announced. That was down from 15 announcements in the prior month.

903 U.S. Banks See Change to Their KFI Scores

KBRA Financial Intelligence (KFI) scored more than 9,000 banks and credit unions in 3Q 2025, with 479 banks having their scores increased quarter-over-quarter (QoQ), while 424 experienced reductions. An additional 3,379 institutions saw no change to their KFI score from 2Q 2025.

The change in a combined 903 banks’ KFI Scores implies that more than 20% of all banks saw an adjustment to their score in the latest quarter of data. The average number of banks experiencing a change to their KFI Score per quarter was 898 throughout the past year.

KFI Scores are proprietary quarterly financial assessment scores that measure the financial health of all U.S. banks and credit unions on an A through E scale using FFIEC and NCUA Call Report data. Our models incorporate various asset quality, capital adequacy, earnings performance, and liquidity and funding measures for managing counterparty risk and robust peer analysis. Get your institution’s KFI Score with a free trial of KBRA Financial Intelligence today.

Loans, Deposits, Net Interest Margins

Total loans extended by banks surpassed $13.2 trillion in 3Q 2025, growing at a rate of 1.2% QoQ. Though the quarterly pace of growth slowed from 2.1% in 2Q 2025, year-over-year (YoY) growth showed an acceleration to 4.7%–the fastest pace of annual loan growth in over two years. Notably, annual growth in agriculture and commercial real estate loans was clocked at robust rates of 2.8% and 2.2%, respectively, whereas construction and development (C&D) and commercial and industrial (C&I) lending continued a yearlong slide.

C&D loans, which KFI highlighted as particularly vulnerable to elevated interest rates and tariff-induced trade tensions, fell 5.9% YoY in the most recent quarter. Meanwhile, C&I loans slumped by 4.9%. Notably, lending categorized as “other loans,” which largely encompasses loans for purchasing securities, as well as loans to states, political subdivisions, and nondepository financial institutions, surged 30.5% over the past year.

Meanwhile, deposits held by commercial and savings banks reached an all-time high of $19.8 trillion. YoY growth of 3.6% was slower than the 4.6% expansion in the quarter prior. Deposits remain relatively expensive–when compared to recent years–as the average cost of deposits among banks held steady at 2%, remaining well above the three-year moving average of 1.6%.

Despite these deposit costs remaining relatively steep in 3Q 2025, a 7.5% YoY gain in net interest income helped expand the average net interest margin (NIM, nontax equivalent) among U.S. banks to 3.9%, up from 3.8% in the prior quarter. Additionally, banks’ non-interest income posted significant growth of 11.1% in the latest quarter, a 2025 high.

The metrics above—as well as all data reported by U.S. banks in FFIEC call reports, Uniform Bank Performance Reports (UBPR), and GAAP financials—can be identified and downloaded by utilizing the Data Wizard in KFI’s Excel add-in. To access our full library of KFI Scores and data tools, request a demo with KFI.

November 2025 M&A

Clarksville, Tennessee-based Fortera Federal Credit Union (KFI Score: B) announced in a November 4 press release that the $914 million credit union will acquire Nashville’s Vanderbilt Credit Union (KFI Score: B-), which most recently reported $53 million in assets. The deal of undisclosed value is expected to close in 3Q 2026.

Terre Haute, Indiana-based First Financial Corporation (NASDAQ: THFF) (KFI Score: B), parent of $5.7 billion First Financial Bank, National Association (KFI Score: B), announced in a November 6 press release that the bank will acquire CedarStone Financial of Lebanon, Tennessee, and its $357 million commercial banking subsidiary CedarStone Bank (KFI Score: B). The cash transaction is valued at approximately $25 million and is expected to close in 1Q 2026.

Rhineland, Missouri-based Rhineland Bancshares, parent of $723 million Peoples Savings Bank (KFI Score: B), announced in a November 11 press release that it will acquire Pacific BancStar, Inc. of Pacific, Missouri, and its $191 million commercial banking subsidiary Bank Star (KFI Score: B). The transaction of undisclosed value is expected to close in 1Q 2026.

Richmond, Indiana-based Richmond Mutual Bancorporation (NASDAQ: RMBI), parent of $1.5 billion First Bank Richmond (KFI Score: B-), announced in a November 12 press release that the $1.5 billion institution will acquire The Farmers Bancorp Frankfort Indiana and its $1.1 billion commercial banking subsidiary The Farmers Bank, Frankfort, Indiana, Inc. (KFI Score: B). The all-stock transaction is valued at approximately $82 million and is expected to close in 2Q 2026.

El Paso, Texas-based GECU Federal Credit Union (KFI Score: B+) announced in a November 13 press release that the $4.4 billion credit union will acquire $187 million Bank of the Southwest (KFI Score: B) of Roswell, New Mexico. The cash transaction of undisclosed value is expected to close in 2026.

Jacksonville, Florida-based Community First Credit Union of Florida (KFI Score: B) announced in a November 15 press release that the $2.7 billion credit union will acquire $324 million First Southern Bank (KFI Score: B) of Waycross, Georgia. The transaction of undisclosed value is expected to close in 2Q 2026.

Sand Springs, Oklahoma-based Green County Federal Credit Union (KFI Score: B) announced in a November 19 press release that the $131 million credit union will acquire $29 million First Oklahoma Federal Credit Union (KFI Score: C-). The transaction of undisclosed value is expected to close in 2Q 2026.

Columbus, Wisconsin-based Jewel Box Financial Services, Inc., parent of $661 million Farmers & Merchants Union Bank (KFI Score: B+), announced in a November 19 press release it will acquire Beaver Dam, Wisconsin’s Ambanc Financial Services, Inc. and its $202 million commercial banking subsidiary American Bank of Beaver Dam (KFI Score: C+). The transaction of undisclosed value is expected to close in 1Q 2026.

Tukwila, Washington-based Boeing Employees Credit Union (KFI Score: B) announced in a November 19 press release that the $28.9 billion credit union will acquire $4.4 billion SAFE Credit Union (KFI Score: B) of Folsom, California. The transaction of undisclosed value is expected to close in 1Q 2027.

Elberton, Georgia-based Pinnacle Financial Corp., parent of $2.2 billion Pinnacle Bank (KFI Score: B) announced in a November 20 press release that it will acquire Dublin, Georgia’s Morris State Bancshares, Inc. (OTCQX: MBLU) and its $1.5 billion commercial banking subsidiary Morris State Bank (KFI Score: B). The transaction of undisclosed value is expected to close in 2Q 2026.

Russellville, Alabama-based CBS Banc-Corp., parent of $2.8 billion CB&S Bank, Inc. (KFI Score: C), announced in a November 24 press release that it will acquire Trenton, Georgia’s TAG Bancshares, Inc. and its $129 million commercial banking subsidiary Citizens Bank and Trust, Inc. (KFI Score: A-) The transaction of undisclosed value is expected to close in 1Q 2026.

Lancaster, Pennsylvania-based Fulton Financial Corporation (NASDAQ: FULT) (KFI Score: B), parent of $31.8 Fulton Bank, National Association (KFI Score: B), announced in a November 25 press release that it will acquire Blue Foundry Bancorp (NASDAQ: BLFY) and its $2.2 billion commercial banking subsidiary Blue Foundry Bank (KFI Score: B) of Rutherford, New Jersey. The all-stock transaction is valued at approximately $243 million and is expected to close in 2Q 2026.

In Case You Missed It

Follow KFI Insights for our latest research, data analytics, and product updates. Read our research reports utilizing data from 10,000 banks, credit unions, and more. Some of our recent analysis highlights include the following:

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