Community Banking Newsletter - Dec. 2025

Date: December 04, 2025

Edition: December 2025

From: BCC - Your Trusted Partner in Community Banking Solutions

Website: www.bcc-usa.com

The December 2025 edition explores progress in federal interest rate policies, community bank M&A, and BOLI, with targeted strategies to adapt effectively.

1. Fed Proposes Reduced Leverage Ratio to Bolster Community Bank Flexibility

The Federal Reserve, FDIC, and OCC unveiled a proposal on November 25 to drop the community bank leverage ratio threshold from 9% to 8%, while extending the compliance grace period to four quarters (federalreserve.org).  This initiative, set against no fresh interest rate adjustments following October’s cut, seeks to ease regulatory demands and align better with community banks’ risk profiles. The November Beige Book noted stable economic activity with mixed loan demand, where interest rates factored into cautious outlooks (federalreserve.org).

Key Takeaway: Community banks can anticipate greater leeway in capital management, enabling expanded local lending without compromising safety standards.

2. Credit Unions and Banks Drive November M&A Wave Among Community Institutions

M&A activity remained vibrant, with credit unions securing deals for profitable community banks in Georgia and New Mexico on November 18, Fulton Financial agreeing to a $243 million stock purchase of New Jersey’s Blue Foundry Bancorp on November 24, and digital firm LevelField advancing toward acquiring Chicago’s Burling Bank on November 17 (americanbanker.com).  These moves highlight consolidation for enhanced services and efficiency in a dynamic sector.

Key Takeaway: Community banks may benefit from exploring acquisitions to integrate innovative tech and broaden customer bases amid increasing credit union involvement.

3. BOLI Guidance Stresses Risk Oversight Amid Unchanged Regulations

November brought no new BOLI regulatory shifts, but longstanding FDIC directives reinforced the need for robust risk processes in purchasing and maintaining BOLI to support employee benefits and income stability for community banks (fdic.gov).  This continuity aligns with broader supervisory focuses on asset management in a steady rate climate.

Key Takeaway: Community banks should prioritize BOLI due diligence and monitoring to safeguard against credit and liquidity risks, maximizing tax advantages.

Enhance your approach with BCC’s dedicated expertise. Visit www.bcc-usa.com for customized advice.