Community Bank CEO Outlook 2026: Your Peers' Plans

In 2026, community banks still have plenty of challenges to overcome, but the sector also has some exceptional opportunities—most notably, the ability to stand out in their communities.

Indeed, a sizable majority (72.8%) of community bank leaders who responded to the latest Independent Banker Community Bank CEO Outlook survey said their greatest business opportunity in 2026 was differentiating their community bank from other financial services firms in their market.

Little Rock, Arkansas, is home to no fewer than 30 banks competing against one another in this midsized metropolitan area, but $270 million-asset Bank of Little Rock is the only one dedicated to serving the city of Little Rock exclusively, says Kimberly H. Markland, president and CEO.

“A deposit in Bank of Little Rock will fund loans and investments here, not in some other city miles away or in another state entirely,” Markland says. “Our team members are active in our community and visible at local events. We like to say we are THE Bank of Little Rock, and we mean it!”

Farmers State Bank in Elmwood, Illinois, finds ways to personally connect to its ag customers, including through events geared to fostering their growth, says Jennifer L. Beard, president of the $62.6 million-asset community bank.

Last November, the bank hosted an event called Roots to Riches: Ladies in Ag to provide “education, inspiration and networking opportunities” for women in the industry, Beard says. In December, the bank held a Farmers Outlook Breakfast meeting where local market leaders shared insights with customers on market trends. And early this year, Farmers State Bank will host its second Beginning Farmer event to support the next generation of agricultural producers by providing them with knowledge about financing opportunities and networking. 

“Each of these initiatives is designed to foster meaningful relationships with farmers while delivering information and resources that add real value to their operations,” Beard says. She adds that the community bank’s Facebook page hosts five videos explaining the five Cs of credit to help grow farmers’ understanding of the credit process.  

PriorityOne Bank in Magee, Mississippi, particularly wants to stand out to younger generations, letting them know the $1.14 billion-asset bank has upgraded its technology so they can open checking accounts electronically or start their mortgage loan application online if they prefer, says Robbie Barnes, president and CEO.

“We can also provide a lot of financial advice and a much higher level of customized personal service—that’s the differentiating factor that we have,” Barnes says. “We’ve got to play to that strength.”

Other 2026 business opportunities that survey respondents cited include increased government-guaranteed agricultural lending, adding new lines of business such as wealth management and treasury management services, and partnering with fintechs.

Deposits are still a challenge

Growing deposits continues to be the greatest business challenge for 2026—cited by almost 60% of respondents, followed by keeping up with technology needs or advancements, attracting and retaining qualified staff, and increasing loans. Increasing earnings, regulatory compliance, competition from nonbank entities and the economic environment were also noted as challenges.

“Deposits are the lifeblood of a bank, so competition is naturally fierce,” says Thanh Pham, president and CEO of $89 million-asset Cali Bank, N.A. in Westminster, California. “Locally, southern California is a high interest rate market, which only adds to the competition level.”

Pham recently learned that 40% of customers new to banking are choosing fintechs, which shows him the importance of improving Cali Bank’s customer experience—and that will be accomplished through technology.

“Nonbank entities are far more aggressive in their credit approach, since they don’t have the same safety and soundness standards as banks,” Pham says.

Barnes is concerned about deposit growth as policymakers implement stablecoin policies, which could lead to deposits flowing out of local banks—funds that could have been used to fund more loans and other community investments.

“That’s a huge threat to our industry if it’s not done correctly with the correct guardrails before it gets implemented,” he says.

Despite efforts to reduce general expenses, major operational costs such as salaries and benefits, real estate taxes, insurance and core technology services have all seen significant year-over-year increases, Beard says. These rising costs create challenges for Farmers State Bank by pressuring profitability, limiting flexibility to invest in growth and making it harder to remain competitive without increasing prices or fees.

“The rising cost of new technology limits our bank from offering the latest digital tools and services that customers increasingly expect,” she says. “This creates a competitive challenge, as larger institutions with greater resources can more easily meet evolving customer expectations and attract market share.”

Even in a small, rural community, Farmers State Bank is seeing growing competition from fintechs, online lenders and specialized agricultural lenders, Beard says. While these competitors do not have the same level of local investment as a community bank, customers increasingly expect the convenience and speed typical of online retail experiences.

“This presents a significant challenge as we strive to balance meeting the community’s needs with maintaining financial sustainability,” she says.

Spratt Savings Bank in Chester, South Carolina, faces steep competition from credit unions, says Jim Bennett, president and CEO of the $150 million-asset community bank.

“Credit unions—which I often describe as nonbank competitors—are something any community banker can spend hours discussing,” he says.

Bennett believes the issues are obvious: Credit unions’ tax-exempt status and loose regulation allow them to do things more easily and with less cost than community banks.

“The principles are simple,” he says. “If you don’t have to pay taxes or worry about ever-increasing compliance costs, you can charge less for loans and pay more for deposits.”

Other nonbank competition for Spratt Savings Bank comes from mortgage brokers that are owned by tract home developers. The developers are giving homebuyers cash incentives to use their mortgage brokers, “which simply cannot be passed up by those homebuyers,” Bennett adds.

For $1.5 billion-asset First Federal Bank in Twin Falls, Idaho, keeping up with technology needs and advancements is challenging, because technology is changing so fast and there are so many options in the market, says Jason A. Meyerhoeffer, president and CEO.

“I could spend my entire day talking to tech vendors wanting to sell us their solution,” Meyerhoeffer says. “So, we have to be focused on the tech investments that we think will provide ROI to our customers and our organization.”

Attracting and retaining qualified staff also remains a challenge. “The labor market is still tight, and wage pressures are constantly changing, which puts a real premium on retaining your best staff,” he says. “The demand for qualified employees and work-from-anywhere opportunities create a lot of opportunities for employees.”

Loan growth

While about a quarter of CEOs responding to the survey said that increasing loans was a challenge, most said loan growth would nevertheless drive their profitability in 2026.

Broken down by loan type, about 47% expect commercial real estate lending to be a significant source of income, 38% highlighted small business lending as a key revenue driver, and 33% pointed to residential mortgage lending as a critical area for profitability. Commercial and industrial lending (32%) and agricultural lending (26%) were also noted as important.

Bank of Little Rock serves many professional service providers like physicians, attorneys, accountants and financial professionals, as well as retail businesses and restaurant owners, Markland says. The community bank also has a successful residential construction portfolio and enjoys relationships with many local homebuilders.

“We are very fortunate that our bank is located in an area where there is a lot of opportunity,” she says. “Our bread and butter is catering to small businesses that value the personalized service and close relationships we are able to provide.”

Residential mortgage and agricultural lending are key potential growth areas this year for Farmers State Bank, Beard says. The community bank has already observed increased housing prequalifications and bridge loan requests and expects its housing portfolio to expand.

For farmers, strong working capital levels are diminishing, creating a need for operating loans and opportunities to refinance equipment or real estate to improve cash flow, she adds.

The economy in southern Idaho is still relatively strong, and Idaho continues to experience an influx of new residents, Meyerhoeffer of First Federal Bank says. This creates economic opportunities for businesses and banks.

“In our markets, loan demand for both business and CRE lending remains good,” he says. “Residential construction remains a strong business line for our bank.”

Home mortgages are the principal loan type for Spratt Savings Bank, Bennett says. Significant new housing is being built in its market, and nearly all the area’s new homes are in planned developments.

While the developer’s mortgage brokers typically win the purchase loan, Bennett says Spratt Savings Bank will begin targeting these homeowners for refinancing as rates fall.

Ever-evolving technology—including with the help of fintechs

Community banks are exploring various technologies to enhance customer service and operational efficiency in 2026, according to our Community CEO Outlook survey.

In 2022, Markland assumed the role of president and CEO, and a new board and management team was assembled. One of the first things they realized was the need to improve some of Bank of Little Rock’s technologies to increase efficiency, help with fraud detection and better serve its customers.

“We are a very small community bank, and balancing technology needs within our budget is always challenging,” Markland says. “Part of our strategic planning process this year is prioritizing our technology needs to align with the bank’s overall strategic objectives, ensuring we invest in the areas that will deliver the most value and support our future growth.”

Forging a fintech partnership, particularly for online checking accounts, is Cali Bank’s greatest business opportunity in 2026, Pham says. 

“There is no way a bank our size could afford to develop its own tech stack, and so we are highly reliant on third-party partners,” he says. “A good fintech would have put in the investment to build and proven out its capabilities as well.”

Right now, the focus is mostly on improving the customer experience, Pham says. By partnering with a fintech, Cali Bank hopes to speed up the account-opening process and use application programming interfaces to help transition account activities.

After Spratt Savings Bank experienced major issues concerning check fraud, it implemented Positive Pay, Bennett says. However, customer adoption has been difficult even though the bank offers the service at no cost.

“We are also evaluating image analysis technology,” he says. “This is challenging for a bank of our size because of the high costs of these platforms.”

PriorityOne Bank enjoys fintech partnerships so much that in 2022, the bank created a new role: director of strategy and technology. This person is “someone who is out all the time looking at the new technology that's out there, looking at how it might be able to be integrated within our core or in our systems,” Barnes says.

The community bank uses fintech technology mostly for back-office functions, but also for customer-facing tools like mobile banking apps and online lending, he says. PriorityOne integrates the fintechs’ solutions into its core to make the process work smoothly “not just for us, but also our customers,” he adds.

“We usually find fintechs through the ICBA ThinkTECH Accelerator program,” Barnes adds. “The association evaluates them and endorses them, so that’s a positive resource for the industry.”

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