ARLINGTON, Va. — Bank executives are increasingly signaling concern about credit unions as competitive pressures rise across lending, deposits and mergers, according to IntraFi’s Q4 2025 Bank Executive Business Outlook Survey, which found many bankers believe the growing role of credit unions in bank acquisitions and commercial lending is reshaping the competitive landscape for community institutions.
The survey, based on responses from 426 bank leaders, highlights a sector that remains cautiously optimistic about economic conditions but increasingly focused on competitive dynamics involving tax-exempt credit unions.
A central theme in the report is the perception among banks that credit union activity is accelerating. IntraFi said credit unions acquired 16 banks in 2025 following a record 22 deals in 2024, and more than half of surveyed executives expect between 11 and 20 credit-union bank purchases in 2026, with roughly a third anticipating even higher totals. The report says bankers see these deals as a continuing trend as smaller banks seek all-cash buyers, reinforcing credit unions’ expanding footprint in traditional banking markets.
Bankers’ concern is less about individual transactions and more about long-term competitive balance. According to the survey, 86% of respondents said their biggest worry tied to credit union acquisitions is what they view as uneven competition between tax-exempt credit unions and taxed community banks. Fewer respondents cited issues such as supervision or underwriting standards, suggesting the primary tension remains centered on regulatory and tax differences rather than operational practices.
The report also reflects increasing awareness among banks of credit union growth in commercial lending. IntraFi noted that credit unions achieved annualized loan growth of roughly 4.6% in the first three quarters of 2025, driven in part by commercial and industrial lending. As a result, 65% of bankers reported heightened competition, saying they have experienced increased pressure either in lending, deposit gathering, or both. Only about a third said they had not felt a material change.
Beyond competition from credit unions, bankers are assessing how potential regulatory changes could reshape the market. The survey found that policymakers’ efforts to ease certain capital requirements are expected to increase competition rather than resolve it. About 36% of bankers said lower capital requirements would intensify loan competition, while nearly the same share predicted greater pressure on deposit pricing. Only a minority viewed the policy shift as likely to meaningfully improve competitive conditions.
Even with those concerns, many banks reported improving operating conditions. Nearly half said loan demand strengthened in 2025, and a majority expect demand to continue rising in the year ahead. Funding costs also improved for most respondents, reflecting expectations that interest rates may decline in 2026, though confidence was somewhat tempered compared with earlier quarters. Access to capital remained stable or improved for nearly all respondents, signaling that balance-sheet constraints are easing despite broader uncertainty.
The survey also shows bankers are divided on how policy changes may affect financial stability. While about one-third said adjustments to capital requirements would have little effect, another sizable group said they worry such moves could weaken both stability and competitive balance. At the same time, only a small portion of respondents believed the changes would strengthen both conditions, underscoring lingering caution among bank executives even as economic expectations improve.