Banks Post Broad Loan Growth as Funding Costs Ease
Lenders described widespread loan and deposit growth alongside falling deposit costs, even as a chunk of the group flagged rising personnel and technology spending.
Coverage: 103 of 104 companies in this theme (ACNB, ALLY, ASB, AX, BAC, BANC, BANR, BCML, BFST, BHB, BKU, BNY, BOH, BRBS, BUSE, BWFG, C, CAC, CARE, CASH, CATY, CBSH, CBU, CFFI, CFFN, CFG, CFR, CHCO, CIVB, COF, COFS, COLB, COSO, CPF, CUBI, CZFS, DCOM, EEFT, EFSI, FBNC, FCAP, FCCO, FCNCA, FHB, FHN, FITB, FLG, FULT, FUNC, GABC, GBCI, GBFH, GCBC, HBAN, HTB, HTH, IBCP, INBK, ISBA, JPM, KEY, LKFN, MCB, MCHB, MRBK, MTB, MVBF, MYFW, NBHC, NBTB, NEWT, NKSH, NRIM, NTRS, NWFL, ONB, OPBK, ORRF, PBFS, PEBK, PEBO, PFS, PGC, PRK, QCRH, RBCAA, RF, SFST, TCBI, TMP, UBSI, UCB, USB, UVSP, WAFD, WAL, WASH, WBS, WFC, WNEB, WSFS, WTFC, ZION) — a sample, not the full set.
Loan demand was the standout theme of the quarter, with 151 of 176 demand reads across the banking group coming in positive and only 16 negative. Associated Banc-Corp (ASB) pointed to double-digit commercial and industrial loan growth alongside strong deposit gains, and now expects 2026 period-end loan growth of 18% to 20% versus its standalone 2025 base as it folds in the American National Corporation integration. Axos Financial (AX) cited solid loan growth across both consumer and commercial books, while ACNB (ACNB) reported record earnings on strong loan production and robust noninterest-bearing deposit growth.
That demand strength showed up directly in margins. Pricing power skewed heavily positive, 33 of 41 reads, as banks pushed deposit costs down faster than asset yields fell. Bank of Hawaii (BOH) logged its ninth consecutive quarter of net interest margin expansion on cash-flow repricing, Business First Bancshares (BFST) pointed to book-yield improvement paired with deposit-cost management, and BayCom (BCML) trimmed its cost of deposits seven basis points to 1.56% despite competitive pressure. Banc of California (BANC) went further, repositioning $2.3 billion of lower-yielding securities into higher-yielding, shorter-duration assets for a 276-basis-point yield pickup and retiring $385 million of subordinated debt ahead of a steep rate reset.
Input costs were the quarter's clearest split, with 49 positive reads against 34 negative out of 92. Many banks framed falling funding costs as a direct earnings driver — Bank of America (BAC) said disciplined expense management combined with growth investment drove 6.6% operating leverage. But a meaningful minority flagged rising costs on the other side of the ledger: Capitol Federal Financial (CFFN) cited higher personnel expense from added headcount, merit increases and market-rate salary adjustments, and Bankwell Financial Group (BWFG) raised its full-year non-interest expense guidance to $65 million-$67 million to fund infrastructure and talent investment. Capex readings, by contrast, carried zero negatives across 42 reads, with banks universally treating technology and talent spending as growth-supportive even when it pressured near-term expenses, as Banner (BANR) and Commerce Bancshares (CBSH) both described.
Hiring was more mixed, 11 positive against 5 negative across 21 reads. CoastalSouth Bancshares (COSO) said it is finding new hiring opportunities tied to industry M&A activity, and Customers Bancorp (CUBI) credited commercial banking teams hired since 2023 with roughly $570 million in year-to-date deposit growth, 65% of it noninterest-bearing. The two inventory reads in the group were both negative: Banc of California is selling $827 million of commercial real estate and multifamily construction loans to reduce credit exposure, while Meridian's (MRBK) mortgage business said low housing inventory continues to constrain volume.
Consumer commentary reinforced the demand picture, 19 of 29 reads positive. Bank of America described resilient consumers and businesses spending, borrowing and investing against a healthy economic backdrop, and Citigroup (C) said its U.S. card customers kept fueling loan growth, higher spend and better-than-expected credit performance. Outlook statements followed the same pattern, 101 of 135 positive, with Axos noting an improved macroeconomic outlook in its credit-loss modeling and Associated Banc-Corp guiding to sustained growth through 2027. The group's message was consistent: growth is broad and funding costs are falling, and banks are willing to spend more on people and technology now to keep it that way.