Jim Dobbs

The KBW Bank Index posted a strong gain after a government report showed employers added 216,000 jobs in December. The labor market strength bodes well for lenders' credit quality but may delay highly anticipated interest rate cuts that would lower banks' funding costs.

A resilient economy and the potential for interest rate cuts could infuse further bullish sentiment into markets and bolster the shares of small lenders.

Overall merger-and-acquisition activity proved modest across the banking sector, but several prominent deals were reached. Read on for details of the year's biggest transactions.

Funding pressures moderated in recent months, but loan charge-offs climbed. With festering concerns about a vulnerable economy, the potential for elevated credits costs could loom large over the upcoming bank earnings season.

The lawsuit accuses Navy Federal of violating the Fair Housing Act and the Equal Credit Opportunity Act after a CNN report that the lender approved a lower percentage of Black and Latino mortgage applicants.

The world's largest credit union reported a 5% increase in total loans in the third quarter while lending at the largest banks was almost stagnant. However, the Vienna, Virginia, institution's charge-offs also jumped significantly.

The acquisition would deepen Orrstown's presence in its home state and Maryland. In recent years, Codorus Valley Bancorp had faced pressure from an activist investor to consider selling.

Proposed capital rules aimed at bigger institutions will force regional and larger community banks to consider ways to grow or seek an exit strategy, bankers and analysts predict.

Top industry executives said this week that price increases are abating, even if they haven't yet fully abated. Their remarks reflect increased confidence that the Federal Reserve will hold interest rates steady — or perhaps even cut them — in the first half of 2024.

Equity, based in Wichita, Kansas, has agreed to buy the parent company of the Bank of Kirksville. The combined company would have $5.4 billion of assets and 74 branches, including 23 in Missouri.

The two companies announced the deal more than a year ago and had anticipated closing it in the first half of 2023. But advocacy groups have urged regulators to withhold approval, arguing that it will hurt consumers.

A small bank stock index posted its biggest gain of the year in early November before that progress faded. What will it take for investors to sustain confidence in the sector?

Total loans at U.S. banks with less than $10 billion of assets grew by 1.9% in the third quarter, according to S&P Global Market Intelligence data. That was a slowdown from the previous quarter, and concerns about the viability of commercial real estate lending could dampen activity further.

The Champaign, Illinois-based company said it would pay $41.6 million to acquire Merchants and Manufacturers Bank Corp., which has five branches in the Greater Chicago area.

Bankers are hopeful that several factors could strengthen profits next year, including higher loan demand and more stable funding costs as the Fed holds the line on — or even lowers — interest rates.

West Plains Bank and Trust in Missouri, No. 11 on this year's Best Banks to Work For ranking, wins high marks for constructive training, employee development, team culture — as well as excellent benefits.

The $7.7 billion-asset federal credit union in East Lansing announced its third deal in as many months — the planned purchase of in-market peer Gabriels Community Credit Union. And it has two bank acquisitions pending.

The deal for SimplyBank, scheduled to be completed in the second quarter, would give First Financial in Terre Haute, Indiana, additional branches in Tennessee and its first presence in Georgia.

But high costs and any downturn in the economy could weigh on lenders and their commercial borrowers in coming months, economists caution.

Proceeds from the sale provide the bank with "flexibility to evaluate and pursue various strategic initiatives to redeploy capital in support of our core banking business," Evans CEO David Nasca said.