- Key insight: InterBank's outperformance in 2025 was the product of a long-standing strategy that got "supercharged" by the Fed's post-pandemic rate hikes.
- Expert quote: "When your assets are able to earn a healthy yield on the top line, and what you're paying for money is relatively low, it really allows you to drive that five-point margin through the middle, and drive an extraordinary amount of profitability." — C.K. Lee, InterBank CEO
- Forward look: The bank expects its balance sheet to shrink modestly this year, but for pretax income to hold roughly steady as it sheds higher-cost funding and recaptures margin from older loan payoffs.
Olney Bancshares of Texas built the top-performing bank in its asset class through a "boringly predictable" strategy.
The $5.45 billion-asset company — which primarily operates through its InterBank subsidiary — topped American Banker's list of top-performing banks in the
Lee, who also serves as president of InterBank's Olney, Texas-based holding company, said the bank's assets consist entirely of loans, which he called a "higher margin business" than securities and the main differentiating factor from competitors.
More than 90% of InterBank's loan portfolio are adjustable-rate credits, Lee added. When the Federal Reserve raised interest rates after the COVID-19 pandemic, the bank's strategy allowed it to "significantly" expand its margin, he said.
"We've always had a strong bank, but it really got supercharged over the last few years by the expansionary Fed policy as they've raised interest rates," he said.
Lee also pointed to the firm's deposit franchise, which is concentrated in rural areas, saying it offers a "stable" and "relatively low-cost" funding source.
InterBank operates more than 40 locations throughout Texas and Oklahoma. Its lending niches include providing financing for the commercial real estate and agriculture industries.
"When your assets are able to earn a healthy yield on the top line, and what you're paying for money is relatively low, it really allows you to drive that five-point margin through the middle, and drive an extraordinary amount of profitability," Lee said. "It's a different business model, but it's one that's worked for us."
While explaining the bank's strong 2025 performance, Lee noted that several borrowers who owned strong, cash-flowing projects chose to hold off on selling or refinancing, betting that their patience would pay off — either through further Fed rate cuts or a more favorable secondary market once buyer financing loosened up. As a result, they kept their loans on InterBank's books for 12 to 18 months longer than originally planned, resulting in what Lee called a "Christmas event" for the bank.
InterBank posted a 5.17% net interest margin last year — well above the cohort average of 3.57% — and reported net income that was more than double the average of the top 20 institutions in its group. The bank also reported loan growth of 5.58% and core deposit growth of 6.06% in 2025.
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Lee said the company does "not buy securities as a matter of policy," adding that he sees them as "margin killers." He cited Silicon Valley Bank's collapse in 2023 as an illustration of the trap hiding inside conventional bank balance-sheet management, where "stockpiled securities" that had looked like liquidity buffers proved to be anything but.
"We don't believe it's a good use of cash, and we don't believe it's real liquidity," the InterBank CEO stated. "We've just never seen a rationale that makes sense, so we don't do it. And therefore we enjoy the top-line revenue that other banks don't."
This approach is one InterBank has taken for the last three decades, according to Lee, who described the bank as "boringly predictable" in its strategy. Coming out of a rate cycle bookended by the financial crisis and the pandemic, the bank has been able to "move into an elite category" without having to change its risk profile, he said.
The bank's efficiency ratio — which measures expenses as a percentage of revenue — has sat in the low 30% range for the past few years. Lee argued that's an "extraordinary accomplishment," saying that in "cycles where the Fed feels the need to cut" rates, the bank has "worked very hard" to control its expenses "in order to maintain acceptable levels of profitability."
Lee said that InterBank is on the "organic growth train," a strategy that has facilitated $2 billion of asset growth over the past six years, while the bank has also reduced its headcount.
"We're aggressive lookers. We're going to be really picky buyers, but don't exclude us from your conversations," Lee added about the bank's M&A approach. "We're going to say no a lot. But at some point, we might say yes."
Looking ahead, Lee anticipates that while InterBank's balance sheet will shrink modestly this year, pretax income should land at a similar level as last year, since the firm is cutting higher-cost funding and recapturing margin from payoffs of older loans that featured narrower spreads. Still, he acknowledged that the bank is "at the mercy of the Fed in some respects," noting that geopolitical tension could impact interest rates before the year's end.
He emphasized that InterBank operates in a "great" regional economy that has allowed the firm to "recycle our capital" and "make a good living for ourselves in the process."
"Our most important thing is to guard the nest egg, and that's to remain blended on credit, remain disciplined on expenses, and take the deals that come to us," Lee said. "That may mean we do better this year than we did last year. It may mean we don't do as good this year as we did last year. But we're not going to change our fundamental philosophy."
