TOP PREDICTIONS FOR COMMUNITY BANKS IN 2025 By Michael A. Johnson, SVP & Southwest Regional Manager, PCBB We can’t know for sure what 2025 will bring, but an educated look at current trends and recent data might give us a glimpse of the future. We interviewed PCBB President Mike Dohren about the key trends he thinks will affect community banks in 2025. Regulatory Changes With the Republican party taking charge of both the executive and legislative branches of the federal government in January 2025, expectations for regulatory reform have shifted, according to Dohren. “It’s too soon to determine specifics, but some of the things that were going to occur next year are likely to be tabled,” he says. Open banking, both as a compliance necessity and a business risk, will affect community banks in the coming year. “Open banking makes it easier for customers to leave a bank, and I think we’ll see more individuals and small and medium businesses having relationships with multiple banks. It will be challenging for community banks to keep market share,” Dohren says. Community banks that have used debt at the holding company level may need to reengineer it in 2025. Many community banks took on trust-preferred debt at the holding company level between 1998 and 2008. As some of these near maturity, banks need to develop a repayment or replacement capital strategy. “Early users are within that five-year window,” Dohren says. Those that haven’t paid off the loans may look to refinance. They may not find new debt 16
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