KBRA Financial Intelligence

KFI’s Quarterly Banking Overview: 4Q 2025

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

• KBRA Financial Intelligence (KFI) provides a concise overview of changes to critical asset and funding metrics within the U.S. banking sector throughout the final quarter of 2025.

• Mergers and acquisitions (M&A) activity among U.S. lenders slowed in January, with 10 deals announced. That was down slightly from 11 announcements in the prior month.

Loans Growth Accelerates as Health Remains Steady

Total loans extended by banks surpassed $13.4 trillion in 4Q 2025, growing at a rate of 2% quarter over quarter (QoQ). In addition to an acceleration in the quarterly pace of loan growth from 3Q 2025, the year-over-year (YoY) expansion accelerated to 5.9%—the fastest pace of annual loan growth in almost three years.

Notably, annual growth in agricultural lending was clocked at a robust rate of 3.8%. KFI previously highlighted agricultural lending as a category that might have been boosted by a 43-day government shutdown throughout October and November, as many U.S. Department of Agriculture (USDA) Farm Service Agency county offices were closed or operating with minimal staff throughout most of the shutdown period–potentially limiting farmers’ access to nonbank credit and financial assistance.

Outstanding construction and development (C&D) loans continued to fall for a sixth consecutive quarter, receding by 6.1%. C&D loans, which KFI has cited as particularly vulnerable to elevated interest rates and tariff-induced trade tensions. This was the only major category of lending tracked by KFI that receded YoY in 4Q 2025.

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 26.9% throughout 2025.

Amid impressive growth in bank lending, delinquency rates have remained quite stable throughout the past year. Consumer lending exhibited a particularly steep drop in delinquency throughout 2025, falling by more than 15 basis points (bps) YoY. The drop can be attributed in part to improving quality among credit card loans, which KFI highlighted last December.

Deposits Rise as Monetary Transformation Cuts Funding Costs

Meanwhile, deposits held by all banks crossed the $20 trillion threshold for the first time. YoY growth of 4.5% was stronger than the 3.5% expansion in the quarter prior. As deposits have risen at a steady rate, they have more recently experienced a decline in associated costs as well, due to a continued easing of monetary policy at the Federal Reserve. Historically, lower rates tend to boost demand for liquidity over yield, slowing or reversing the accumulation of interest-bearing liabilities such as time deposits.

Demand deposits and other checkable deposits, which typically pay no interest or offer variable rates that can be adjusted downward, tend to grow more quickly as rates fall. Although average deposit costs among all U.S. banks (calculated as total interest expense on deposits relative to average total deposits) remain elevated at 1.9%—above the three-year moving average of 1.7%—that is the lowest rate recorded in the past two years.

The metrics above—as well as all data reported by U.S. banks in Federal Financial Institutions Examination Council (FFIEC) call reports, Uniform Bank Performance Reports (UBPR), and Generally Accepted Accounting Principles (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.

January 2025 M&A

Aberdeen, Washington-based Great Northwest Federal Credit Union (KFI Score: A) announced in a January 5 press release that the $263 million credit union will acquire Strait View Credit Union (KFI Score: B) of Port Angeles, Washington, a $105 million credit union, in a transaction of undisclosed value.

Hannibal, Missouri-based HNB Bancorp, Inc., parent of $968 million HNB National Bank (KFI Score: B+), announced in a January 8 press release that it will acquire Kearney, Missouri’s Trustco Bankshares, Inc. and its $316 million commercial bank subsidiary Kearney Trust Company (KFI Score: B) in a transaction of undisclosed value. The deal is expected to close in 2Q 2026.

Canton, New York-based Community Financial System (NYSE: CBU) (KFI Score: B+), parent of $17 billion Community Bank, National Association (KFI Score: B), announced in a January 15 press release that it will acquire Batesville, Indiana’s ClearPoint Federal Bank & Trust, a $135 million covered savings association, in a cash and stock transaction valued at $40 million. The deal is expected to close in 2Q 2026.

Flagler, Colorado-based High Plains Banking Group, Inc., parent of $441 million High Plains Bank (KFI Score: C+), announced in a January 15 press release that it will acquire Hugo, Colorado’s First Liberty Capital Corp. and its $150 million commercial bank subsidiary First National Bank of Hugo (KFI Score: B+) in a transaction of undisclosed value. The deal is expected to close in 2Q 2026.

Madison, Wisconsin-based Greenwoods Financial Group, Inc., parent of $895 million Bank CMG (KFI Score: B), announced in a January 20 press release that it will acquire Mineral Point, Wisconsin’s Southern Wisconsin Bancshares Corp. and its $437 million commercial bank subsidiary Farmers Savings Bank (KFI Score: B+) in a transaction of undisclosed value. The deal is expected to close in 2Q 2026.

Lino Lakes, Minnesota-based Ameri Financial Group, parent of $827 million First Resource Bank (KFI Score: B), announced in a January 20 press release that it will acquire Wyoming, Minnesota’s Wyoming Bancshares, Inc. and its $244 million commercial bank subsidiary First State Bank of Wyoming (KFI Score: A-) in a transaction of undisclosed value. The deal is expected to close in 2Q 2026.

Inver Grove Heights, Minnesota-based Heartland Credit Union (KFI Score: B-) announced in a January 21 press release that the $636 million credit union will acquire Oakdale, Minnesota’s Novation Credit Union (KFI Score: B), a $242 million credit union, in a transaction of undisclosed value. The deal is expected to close in summer 2026.

Salina, Kansas-based Berco, Inc., parent of $1.3 billion The Bennington State Bank (KFI Score: B+), announced in a January 24 press release that it will acquire Eskridge, Kansas’s Flint Hills Bank (KFI Score: A-), a $155 million commercial bank, in a transaction of undisclosed value. The deal is expected to close in 2Q 2026.

El Campo, Texas-based Prosperity Bancshares, Inc. (NYSE: PB) (KFI Score: B+), parent of $38.5 billion Prosperity Bank (KFI Score: B), announced in a January 28 press release that it will acquire Houston, Texas’s Stellar Bancorp, Inc. (NYSE: STEL) (KFI Score: B+) and its $10.8 billion commercial bank subsidiary Stellar Bank (KFI Score: B) in a cash and stock transaction valued at $2 billion. The deal is expected to close in 2Q 2026.

Notre Dame, Indiana-based Notre Dame Federal Credit Union (KFI Score: B) announced in a January 30 press release that the $1.3 billion credit union will acquire Catholic United Financial Credit Union (KFI Score: B) of Saint Paul, Minnesota, a $34 million credit union, in a transaction of undisclosed value. The deal 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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