Community Banking Newsletter - August 2026

Date: August 4, 2026

Edition: August 2026

From: BCC - Your Trusted Partner in Community Banking Solutions

Website: www.bcc-usa.com

Welcome to the BCC Community Banking Newsletter, focused exclusively on developments affecting community banks.

1.  FDIC Revises Interagency BOLI Guidance, Removing Reputation Risk References

In early June 2026, the FDIC updated its longstanding Financial Institution Letter on Bank- Owned Life Insurance (originally issued December 2004). The revision to the Interagency Statement on the Purchase and Risk Management of Life Insurance removed references to

reputation risk while reaffirming core expectations. Institutions must maintain comprehensive

risk management processes, strong senior management and board oversight, clear policies with meaningful risk limits, thorough pre-purchase analysis, and ongoing post-purchase monitoring of BOLI holdings (fdic.gov).

Key Takeaway: Review and update BOLI policies and board reporting to align with the

streamlined guidance. This supports continued safe use of BOLI for funding employee benefits and key-person coverage while maintaining concentration discipline (commonly guided near 25% of Tier 1 capital).

2.  Steady Community Bank Deal Flow Continues Across Multiple States

July 2026 saw continued community bank consolidation. Notable announcements included First Gothenburg Bancshares (Nebraska) agreeing to acquire Foundation First Bank; Agricultural Banking Corp. (Illinois, parent of Frederick Community Bank) agreeing to buy Buckley Bancorp; and Hometown Financial Group (Massachusetts) agreeing to acquire Primary Bank (New Hampshire) for approximately $160 million in cash and stock. Separately, Alma Bank (New York) announced an agreement to acquire American Community Bank, creating a combined institution of roughly $2 billion in assets. These deals reflect ongoing in-market and regional expansion among smaller institutions (bankingjournal.aba.com).

Key Takeaway: Elevated deal activity underscores the need for proactive capital planning, succession strategies, and due diligence readiness. Community banks can evaluate strategic partnerships or acquisitions to enhance scale and local market presence amid ongoing consolidation.

3.  Federal Reserve Holds Rates Steady at July FOMC Meeting

At its July 28-29, 2026 meeting, the Federal Open Market Committee voted 9-3 to maintain the federal funds target range at 3-1/2 to 3-3/4 percent. The Committee cited solid economic expansion, strong productivity and capital investment, and stable labor markets, while noting that inflation remains elevated relative to the 2 percent goal, partly due to energy and supply shocks. Three members dissented in favor of a 25-basis-point increase. The Fed reiterated its commitment to price stability and maintaining ample reserves (federalreserve.gov).

Key Takeaway: The prolonged higher-rate environment continues to pressure net interest

margins and deposit costs. Community banks should stress-test balance sheets, refine asset-liability management, and explore BOLI and other non-interest income tools to support earnings stability.

This edition is prepared for community bank leadership. For tailored BOLI, compensation, or

strategic advisory support, visit www.bcc-usa.com.