With the growing economic uncertainty caused by geopolitical instability and the debate over tariffs and trade policy, many community bank CFOs have more on their plates today than they’ve ever had before. There’s plenty to keep CFOs on their toes—including interest rate volatility, the introduction of new accounting and capital reporting standards, and industry cost pressures.
Several community bank CFOs shared their thoughts on these and other topics from Independent Banker’s 2025 CFO Outlook survey. According to many of the respondents, their role as CFO has become more complex due to this period of flux.
Accounting and capital standards add complexity
“The introduction of high-profile accounting standards like CECL has definitely created more complexity for my role,” says Anita Drentlaw, president, CEO and CFO of $190 million-asset New Market Bank in Elko New Market, Minnesota. “It’s more important than ever to stay educated and be a part of networking groups. For example, I participate in a couple of CFO networks in our state that have been extremely valuable.”
Last August, Drentlaw attended the ICBA CFO Forum—an experience she says was especially helpful. “Most of the banks at the CFO Forum were bigger than us,” she says. “I didn’t realize how much complexity they have to deal with. To be honest, it made me thankful that we’re on the smaller side.”
Drentlaw plans to use the things she learned at the CFO Forum as part of her bank’s strategic planning process in anticipation of future growth. (For more information on the CFO Forum, visit icba.org/cfoforum)
Many respondents said that senior management (including the CEO) are now more inquisitive about the impact of accounting and capital changes. “The complexity of topics like CECL has prompted more frequent and focused conversations among the bank’s management team,” says Greg Niska, CFO of $210 million‑asset Gateway Bank in Mesa, Arizona.
“There’s greater emphasis on understanding the underlying assumptions and long-term implications of these standards, particularly as they relate to overall financial planning,” he adds. “[The frequency of] communication remains consistent, but we’re engaging at a deeper level than in the past to ensure clarity and alignment across the team.”
“Our bank really didn’t have much of a problem implementing CECL,” says Brett deMilliano, executive vice president and CFO of $1.8 billion-asset First American Bank in Artesia, New Mexico. “We have a fairly conservative allowance, so we saw very little impact. Our loan loss reserve is around 2%, so we’re safe and stable.”
How has the introduction of high-profile accounting standards like CECL affected your role in the organization?
Dealing with cost pressures
One common theme among respondents to the Independent Banker 2025 CFO Outlook survey was that industry cost pressures have affected their ability to utilize outside advisors and vendors as resources.
Most respondents said costs for outside services have risen at least 10% over the past two years, with many saying these costs have risen more than 20%. “Everything costs more, including team members’ salaries,” says Anita Drentlaw, president, CEO and CFO of New Market Bank in Elko New Market, Minnesota. “Higher costs can make it harder to implement new technologies.”
“We have been actively looking at different vendors, consultants and software solutions over the past couple of years as costs continue to rise,” says Brett deMilliano, executive vice president and CFO of First American Bank in Artesia, New Mexico. “We’re trying to establish new relationships or get the costs from our existing vendors down, if possible.”
Greg Niska, CFO of Gateway Bank in Mesa, Arizona, says cost pressures haven’t affected his bank’s ability to work with its current vendors and advisors. “However, we’ve become more deliberate about evaluating new engagements and are more attentive to contract terms and pricing structures,” he says. “It’s all about maximizing value while maintaining the quality and continuity of the services we depend on.”
Attracting deposits remains a challenge
Community banks were flush with deposits after the pandemic, but growing deposits is a challenge once again. Most survey respondents said it’s harder now than it was a year ago.
“The current rate environment has been very competitive in our area,” says Donna Purser, vice president and CFO of $213 million‑asset Community Spirit Bank in Red Bay, Alabama. “Customers who were used to low rates are now demanding rates higher than we’re willing to pay, so we have lost some deposits. Even as rates come down, I believe we will still feel the pressure to pay higher rates. Now that customers have enjoyed the benefits of higher rates, they don’t want to lose the ability to receive a higher return on their money.”
Meanwhile, Community Spirit Bank continues to experience strong loan demand. “We have used a small number of brokered deposits but still expect core funding to be our primary source for assets,” says Purser. “We want to maintain that personal touch with our depositors and serve our local community.”
Heavy competition has made it difficult for Gateway Bank to retain deposits. “It’s hard to match rates offered by credit unions and some online money market investment funds,” says Niska. “As a result, deposit growth has been slower than usual the past couple of years, which has presented some funding challenges, especially as loan demand has remained strong. However, we’re finally starting to see some of these deposits return.”
To meet funding challenges, Gateway Bank has looked to sources it hasn’t routinely used in the past, including brokered deposits. “We expect these will continue to play a role in our near-term funding strategy,” says Niska.
Drentlaw says New Market Bank grew significantly during the pandemic, like a lot of banks did. “We went from $130 million to $180 million in a relatively short period of time,” she explains. “Although there’s been some [deposit] runoff, which was to be expected, we’ve been able to retain most of the new customers we acquired during this time and even grow these relationships.”
Attracting deposits is part of commercial lenders’ incentive plans. “It’s not just about making loans anymore,” says Drentlaw. “It’s about bringing the entire banking relationship over. While we have used brokered deposits at times, we’ve mostly been able to fund our balance sheet with core deposits, which helps keep the cost of funds down.”
How has your community bank’s ability to attract deposits shifted over the past year?
Interest rates’ impact on bank earnings
Not surprisingly, the volatile interest rate environment has significantly affected community banks’ earnings over the past couple of years—mainly on the cost of funds and interest expense.
“The rapid rise in interest rates compressed our margins, as we had to increase deposit costs quickly to stay competitive while asset yields lagged behind,” says Niska. “Deposit growth slowed as some customers moved funds into higher-yielding options we couldn’t match. Now that rates have stabilized, we’ve been able to reprice those assets at higher yields while maintaining or lowering our cost of funds. Margins are expanding and we’re starting to see some of those deposits return.”
According to deMilliano, First American Bank borrowers were willing to absorb the increase in debt service. “Now, with rates falling about 100 basis points, we feel like we’re in a sweet spot. Our margins are healthy, and our earnings and capital are solid,” he says. “As a result, our financial performance is probably as strong as it’s ever been.”
Purser says Community Spirit Bank has been able to adjust loan rates to keep up with deposit rates and maintain strong earnings. “We feel our bank was well-positioned for rising rates, so we have remained profitable,” she says.
New Market Bank’s core earnings have improved with higher interest rates, because the bank has been able to reprice loans to reflect the higher rates.
“For a while,” Drentlaw says, “borrowers were holding off and waiting for rates to drop, but that’s not necessarily the case anymore, because I think most borrowers have accepted that higher rates are here to stay.”
For homebuyers in suburban Minneapolis, finding an affordable home is a bigger challenge than interest rates. “We’re still seeing multiple offers on homes in the $400,000 to $500,000 price range, because they’re in such high demand,” says Drentlaw. “We have qualified borrowers who are sitting in the queue because they can’t find a house.”
Navigating tariffs and trade policy
The debate over tariffs and U.S. trade policy has been one of the major economic stories of 2025. Many respondents to the CFO Outlook survey said their banks are closely monitoring the possible impact of tariffs on their financial outlook and strategy.
“The primary impact of the tariff debate has been increased uncertainty among our customers,” says Greg Niska, CFO of Gateway Bank in Mesa, Arizona. “Many are delaying capital investments, tightening expenses or scaling back planned expansions until there’s greater clarity on trade policy. We’re staying agile by monitoring developments closely and maintaining regular contact with customers.”
“The impact of tariffs is still unknown, but we must consider the possible effects,” says Donna Purser, vice president and CFO of Community Spirit Bank in Red Bay, Alabama. “We know that tariffs will increase economic uncertainty for businesses and households. Tariffs could also affect credit risk, so we’re closely monitoring this on our consumer and business portfolios.”
“I don’t think anybody really knows what [the tariffs] are going to look like,” says Brett deMilliano, executive vice president and CFO of First American Bank in Artesia, New Mexico. “We just don’t know yet where it will start to get painful for our customers. So far, it’s been pretty quiet for our borrower base.”
As accounting and capital reporting standards have become more complex, how has your interaction with the CEO and other executive officers changed?
Engagement with examiners has shifted
Some survey respondents said their engagement with bank examiners and the examiner in charge has improved since their last two safety and soundness exams. “There has been a change in examiner tone with the new administration,” says deMilliano. “The conversations with examiners are a lot easier, and there’s been less regulatory pressure than we’ve seen with prior administrations.”
Niska says bank examiners today are taking a closer look at liquidity and interest rate risk, often questioning long-standing practices. “For instance, we now review the investment portfolio monthly [as requested by the regulator] to assess which bonds make the most sense to include in liquidity calculations after considering their potential losses.”
Niska also notes that he, among others, have seen examiners place an unexpectedly heavy focus on some surprising areas that haven’t been major hot buttons in the past, such as disaster recovery.
Going forward, Niska expects bank examiners to push for more complex financial reporting from community banks “wherever and whenever possible.” He adds, “We’ll stay informed and engaged through ICBA to ensure we’re prepared and can provide feedback where it counts. Hopefully, this will help keep things practical and manageable for community banks like ours.”
How has your engagement with bank examiners and the examiner-in-charge during and between examinations changed since your last two safety and soundness exams?
Who took the survey?
