Community Banking Newsletter - Jan. 2026

Date: January 06, 2026

Edition: January 2026

From: BCC - Your Trusted Partner in Community Banking Solutions

Website: www.bcc-usa.com

Welcome to the January 2026 newsletter, spotlighting dynamic shifts to strengthen community banking strategies. This edition analyzes evolutions in community bank M&A, federal interest rates, and BOLI, delivering innovative perspectives for adaptation.

1. Community Bank M&A Closes 2025 with Robust Deal Announcements

December 2025 featured a flurry of community bank mergers, including OceanFirst Financial’s $579 million acquisition of Flushing Financial on December 30, bolstered by $225 million from private equity (americanbanker.com); Burke & Herbert’s expansion into Pennsylvania via a deal announced December 19 (prnewswire.com); and CVB Financial’s $21.7 billion merger with Heritage Financial on December 18 to enhance California market presence(globalnewswire.com). Additional transactions involved Mercantile’s approved purchase of Eastern Michigan (prnewswire.com), an investor group’s buy of MC Bancshares (americanbanker.com), Home Bancorp’s $150 million deal for Mountain Commerce Bancorp (globalnewswire.com), and South Plains Financial’s $105.1 million acquisition of a Houston bank (globalnewswire.com). These moves reflect a year-end push for geographic growth and operational scale amid favorable conditions.

Key Takeaway: Community banks should assess acquisition prospects to fortify market positions and integrate efficiencies, capitalizing on accelerated regulatory environments.

2. Federal Reserve Executes Final 2025 Rate Cut Amid Balanced Risks

The FOMC reduced the federal funds rate target by 0.25 percentage points to 3.5%-3.75% on December 10, with the rate on reserve balances lowered to 3.65%, citing moderate economic expansion, slowed job gains, rising unemployment, and somewhat elevated inflation. The Committee also plans to purchase shorter-term Treasury securities to sustain ample reserves, signaling a shift from runoff. Economic uncertainty persists, with increased downside risks to employment (federalreserve.org).

Key Takeaway: Community banks can refine lending strategies to exploit lower rates for increased demand, while monitoring local job trends to manage credit risks effectively.

3. BOLI Oversight Remains Steady with Emphasis on Risk Management

No significant regulatory changes emerged for BOLI in December 2025, with OCC guidelines continuing to stress pre-purchase due diligence, ongoing monitoring for credit and liquidity risks, and alignment with employee benefit funding. This stability supports BOLI as a reliable tool for tax-efficient income in community banks, amid unchanged market dynamics (occ.gov).

Key Takeaway: Community banks should schedule annual BOLI assessments to ensure compliance and maximize returns, integrating it into broader balance sheet optimization.

Partner with BCC for expert navigation of these trends. Visit www.bcc-usa.com elevate your operations.