Community Banking Newsletter - Nov. 2025

Date: November 03, 2025

Edition: November 2025

From: BCC - Your Trusted Partner in Community Banking Solutions

Website: www.bcc-usa.com

The November 2025 edition reviews the highlights in BOLI, community bank M&A, and federal interest rates, offering new angles to support your strategic planning.

1. FDIC Refreshes BOLI Guidance in Examination Policies

The FDIC updated its Bank-Owned Life Insurance module in the Risk Management Manual of Examination Policies during October 2025, reinforcing protocols for assessing BOLI-related risks such as credit, liquidity, and compliance (fdic.gov).  This revision underscores the importance of thorough pre-purchase analysis and ongoing monitoring for community banks utilizing BOLI to fund employee benefits and generate tax-efficient income. No major policy overhauls were introduced, but the update aligns with broader supervisory emphases on sound risk management amid economic fluctuations.

Key Takeaway: Community banks should revisit BOLI holdings against the latest FDIC criteria to mitigate potential examination findings and optimize asset performance.

2. Community Bank M&A Gains Traction with Key Deals and Positive Outlook

October 2025 saw continued momentum in community bank mergers, exemplified by HBT Financial’s $170 million agreement to acquire CNB Bank & Trust, enhancing its Illinois footprint and operational scale (hbtfinancial.com).  Industry analyses indicate 2025 M&A activity is poised for a three-year high, fueled by favorable valuations and strategic consolidations to address competitive pressures (spglobal.com).  Credit unions’ growing acquisitions of banks also spotlight evolving dynamics, prompting community institutions to evaluate partnership models for sustainability.

Key Takeaway: Community banks can leverage this active market to forge alliances that bolster digital capabilities and geographic expansion, while conducting rigorous due diligence.

3. Federal Reserve Delivers Quarter-Point Rate Cut Amid Employment Concerns

On October 29, 2025, the FOMC reduced the federal funds rate target by 0.25 percentage points to 3.75%-4.00%, citing moderate job gains and heightened downside risks to employment, while inflation remains somewhat elevated (federalreserve.gov).  The Committee also finalized its balance sheet runoff by December 1, signaling adaptive monetary policy. For community banks, this cut could lower funding expenses and spur loan activity, though persistent uncertainties necessitate vigilant monitoring of local economic indicators.

Key Takeaway: Community banks should look to recalibrate deposit pricing and credit portfolios to capitalize on reduced rates, potentially improving net interest margins in a softening labor market.

Discover how BCC can assist with these evolving landscapes. Visit www.bcc-usa.com for in-depth consultations.