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The FDIC's Quarterly Banking Profile for quarter four 2025 reports the performance for the 3,909 community banks evaluated. Here are the key highlights: 

Note: Graphs are for all FDIC-insured institutions unless the graph indicates it is only for FDIC-insured community banks. 

Financial Performance 

• Quarterly net income decreased $307.6 million (3.8%) from the previous quarter to $7.9 billion, with 53.4% of community banks reporting a decrease. 

• Pretax return on assets decreased to 1.35%, down 11 basis points quarter over quarter; however, overall increased by 28 basis points year over year. 

• Net interest margin rose to 3.77%, up 4 basis points from the prior quarter and 33 basis points year over year.

Costs and Efficiency 

• Noninterest expense increased by $841 million (4.8%) from the previous quarter and has increased 7.7% year over year. 

• Provision expenses decreased by 0.1% quarter over quarter and have increased 8.1% year over year, signaling consistent concern over potential credit losses. 

• Efficiency ratio increased to 62.46%, up 1.87% from the prior quarter, indicating declining cost control relative to revenue. 

Loan and Deposit Trends  

• Loan and lease balances increased by $26.8 billion (1.4%) quarter over quarter and 5.4% year over year, led by nonfarm nonresidential CRE, 1–4 family residential loans, and commercial and industrial loans. 

• Domestic deposits rose 1.5% quarter over quarter and 5.0% year over year, with stronger growth in interest-bearing vs. noninterest-bearing accounts. 

• Nearly 70% of community banks reported loan growth, and about 65% reported deposit growth during the quarter. 

Asset Quality 

• Past-due and nonaccrual loans (PDNA) increased 10 basis points to 1.36% from the previous quarter. 

• Net charge-off ratio increased six basis points from the prior quarter to 0.29%, continuing to be above the pre-pandemic average of 0.15%. 

• Reserve coverage ratio continued to decline to 154.3%, indicating that allowance growth lagged increases in noncurrent.

Capital and Structural Stability 

• Capital ratios remained stable across the board: CBLR rose to 14.30%, and the leverage capital ratio remained at 11%. 

• Unrealized losses on securities fell by $3.2 billion (9.8%) from the prior quarter to $30.0 billion in total. 

• Community bank count declined by 44 during the quarter due to transitions, sales, and mergers and acquisitions. 

Conclusion and Outlook 

The fourth quarter of 2025 presented a more mixed performance for community banks, as earnings softened modestly while core balance sheet growth remained steady. Quarterly net income declined $307.6 million (3.8%) from the prior quarter to $7.9 billion, with slightly more than half of institutions reporting lower earnings. Pretax return on assets decreased 11 basis points quarter over quarter to 1.35%, though it remained 28 basis points higher than the same period a year earlier. Net interest margin continued to improve, rising to 3.77%, up 4 basis points from the previous quarter and 33 basis points year over year, reflecting the ongoing benefits of repricing assets in a higher-rate environment. 

Cost pressures, however, weighed on operating efficiency. Noninterest expenses increased by $841 million (4.8%) during the quarter and are now 7.7% higher than a year ago. This contributed to a higher efficiency ratio, which rose to 62.46%, up 1.87 percentage points from the prior quarter, indicating weaker cost control relative to revenue generation. Provision expenses remained relatively stable quarter over quarter but increased 8.1% year over year, signaling that institutions continue to prepare for potential credit deterioration. 

From a capital and structural standpoint, the community banking sector remained stable. Regulatory capital ratios held steady, with the community bank leverage ratio rising slightly to 14.30% and the leverage capital ratio remaining at 11%. Unrealized losses on securities declined by $3.2 billion (9.8%) during the quarter to $30.0 billion, reflecting modest improvements in securities valuations. Meanwhile, consolidation within the sector continued, as the number of community banks declined by 44 during the quarter due to mergers, acquisitions, and other structural transitions. 

Looking ahead, community banks enter 2026 with solid capital positions and continued loan and deposit growth, but with growing attention on operating costs and credit quality trends. As economic conditions evolve and consolidation persists, institutions will need to balance growth opportunities with disciplined risk management and operational efficiency. As the regulatory environment is ever-evolving, BerryDunn has a Federal Impacts page, where we are frequently posting updates on the federal landscape. Check out this page for timely information that may impact your institution or your institution’s borrowers. We wish you all the best in 2026 and, as always, your BerryDunn team is here to help! 

Read this if you are a medical director, practice/hospital administrator, compliance officer, risk manager, or clinical quality director. 

Early in my first year as a surgical resident, while taking my first night call, I was assigned a simple task: See the patients scheduled for surgery the next day and “get them to sign the consent.” At the time, elective patients were routinely admitted the night before surgery. 

I remember telling my senior resident that I wasn’t yet prepared to have a meaningful conversation about risks, benefits, or alternatives. The response was immediate: “Don’t worry—the surgeon already went through everything in the office. The hospital just needs the form signed.” 

That moment stayed with me. While common back in the day, it reflects a mindset that still surfaces today: Consent as documentation rather than consent as understanding. 

—Alan Weintraub

Whether on paper or via electronic means, patients are asked to sign an ever-increasing number of forms—procedural consents, treatment permissions, privacy notices—often written in dense, legalistic language and presented during stressful or time-pressured moments. While these documents serve important regulatory and legal purposes, they do not, by themselves, ensure informed consent. Just as many of us scroll through an app’s conditions of use before downloading and checking the box to agree without reading, many patients sign a consent without fully understanding what they are agreeing to or feeling comfortable enough to ask questions.

In an environment of increasing comfort with ‘check the box’ agreements, consent can become a transactional exercise—an administrative checkpoint focused on signatures rather than comprehension. The emphasis shifts to ensuring paperwork is completed, rather than ensuring patients understand what is being proposed, what alternatives exist, what risks matter most to them, and whether they genuinely agree. 

Informed consent: More than a form 

The Joint Commission has been clear that informed consent is not simply a form, but a process of communication—one that ensures patients receive information in a manner they can understand, are informed of material risks, benefits, and alternatives, and are given the opportunity to participate meaningfully in decisions about their care. View the Joint Commission statement. 

When consent is reduced to a throughput-driven task, organizations increase the risk of patient dissatisfaction, quality complaints, and adverse events linked to misunderstanding. Conversely, consent processes that emphasize clarity, dialogue, and comprehension support patient rights, safety, and trust. 

Strategies for a patient-centered consent process 

The challenge for healthcare leaders is balancing legitimate regulatory, legal, and accreditation requirements with patient-centered care that respects autonomy and promotes understanding. Consent should be a process done with patients, not one done to them. Informed consent is not about forms—it is about conversation. 

For hospital leaders, the question is not whether consent forms are signed, but whether consent is truly informed. A few practical strategies for designing more meaningful, patient-centered consent processes include: 

• Clear, accessible educational materials that focus on what patients need to know—not everything an organization wants to disclose. Materials should be written at an appropriate reading level, avoid medical jargon, and use analogies or visuals, where helpful. These support compliance with regulatory and accreditation requirements, including those pertaining to accessibility and non-discrimination. 
• Streamlined consent forms that reinforce, rather than replace, clinician/patient conversations. Well-designed documents can meet regulatory and legal standards while supporting—not substituting for—discussion. 
• Processes that allow time for questions, especially when risks, outcomes, or alternatives are significant. Allowing space for dialogue reduces the likelihood of surprise, dissatisfaction, and quality-of-care complaints, and may also reduce malpractice exposure. 

None of this is easy in busy clinical environments. Time pressures, staffing constraints, and throughput demands are real. Even small changes, however, in how consent is framed and operationalized can make a meaningful difference. 

Ultimately, consent is not a piece of paper. It is a moment of trust. When we treat it as such, we move closer to the experience patients deserve—and the care we aspire to deliver. 

BerryDunn can help 

Our healthcare compliance team can help. We incorporate deep, hands-on knowledge with industry best practices to help your organization manage compliance and revenue integrity risks. Learn more about BerryDunn’s healthcare compliance consulting team and services.   

For many years, the tax treatment of business meal expenses has remained relatively consistent, with most meals limited to a 50% federal income tax deduction. While temporary relief allowed certain restaurant meals to be fully deductible during the 2021 and 2022 tax years, those provisions expired, and familiar rules returned in 2023.  

For tax years beginning January 1, 2026, additional changes under Internal Revenue Code §274(o) will further restrict meal deductibility. These changes will substantially affect how businesses classify, track, and deduct food-related expenses incurred in the ordinary course of business. 

Which meals are no longer deductible? 

Most notably, the change eliminates meal deductions previously allowed under the “convenience of the employer” standard and directly affects meals offered in office settings and during work hours for convenience or employee morale. Meals provided during training sessions, staff meetings, and overtime work will become entirely non-deductible.

2026 changes for employer eating facilities (cafeterias) 

Starting in 2026, businesses generally can no longer deduct costs associated with operating an on‑site cafeteria or providing meals through an employer‑operated eating facility. This includes many costs historically treated as partially deductible meal expenses. While these meals may still be excludable from employee income under existing rules, the employer’s federal income tax deduction will generally be eliminated (subject to limited exceptions).   

Which meal expenses remain deductible? 

Certain meal expenses will retain deductibility: 

• Meals purchased at restaurants while meeting with clients or prospects will remain 50% deductible. 
• Meals incurred while traveling for business or attending conferences will continue to be 50% deductible. 
• Meals provided as part of a company-wide social event, such as a holiday party, company outing, or team‑building event, will continue to be 100% deductible. 
• Common breakroom items such as coffee, soda, and snacks may continue to be excludable from employee income as de minimis fringe benefits under IRC §132(e); however, the employer deductibility of these costs remains uncertain beginning in 2026 and may depend on forthcoming IRS guidance and a facts‑and‑circumstances analysis. 

Accounting best practices for deductible meal expenses 

In preparation for these changes, businesses should consider establishing separate general ledger accounts for: 

• 100% deductible meal expenses 
• 50% deductible meal expenses 
• Non‑deductible meal expenses 

It’s equally important to train the individuals responsible for entering expenses, so they understand how each type of meal should be categorized. Proper classification at the point of entry improves accuracy, enhances consistency, and reduces time‑consuming corrections during tax preparation—helping ensure compliance as the rules evolve.  

As always, your BerryDunn team is here to help. Learn more about our team and services, and reach out with questions. 

Each year, more utility leaders realize they are playing catch up in providing the online experience their customers expect.  And, each year, the bar gets higher. Easy self-service options, real-time updates, and responsive support have become the norm. As a result, today’s utility customers bring those same expectations to every interaction.

For local government utilities, this shift presents an opportunity to enhance customer service through the alignment of systems that support it. When the Customer Information System (CIS) and Constituent Relationship Management (CRM) platforms are intentionally integrated, they do more than manage billing and service requests. Together, they enable a more connected, customer-centered experience—one that supports frontline staff, improves communication and responsiveness, and helps the organization continuously elevate the level of service it provides.

Why CIS and CRM need each other

CIS and CRM each play critical roles. 

• CIS is the system of record for customer billing and account data. It manages billing, meter data, service orders, and account history with precision and regulatory reliability.
• CRM is the system of engagement. It captures customer interactions, tracks cases, and enables communication across channels.

The challenge arises when these systems operate independently instead of in partnership. Without integration, service teams lack visibility into billing context, customers receive inconsistent information, and departments are forced to rely on manual workarounds.

When CIS and CRM are aligned, utilities close those gaps. Staff gain a full view of the customer, not just an account number, and customers experience service that feels coordinated rather than fragmented.

Meeting utility customers where they are

Utility customers now expect choice in how they interact, whether that’s through:

• Self-service portals and mobile apps
• Text/SMS notifications, IVR, or live chat
• Phone calls, emails, or in-person visits

A well-integrated CIS–CRM ecosystem makes omnichannel service manageable rather than chaotic. For example:

• A missed payment in CIS can automatically trigger a CRM workflow that sends reminders via email or SMS.
• An outage recorded in CIS can generate proactive alerts and populate CRM cases before customers ever call.
• A customer service representative can see billing history, prior complaints, and active service orders in one place—reducing handle time and improving resolution quality.

The result directly improves the customer experience while reducing call volumes and making more efficient use of limited staff resources; outcomes that are essential for public sector utilities.

Customer-centered configuration for utilities

Technology alone does not create a better customer experience. Design decisions often made early and quietly determine whether systems enable service excellence or reinforce silos.

Leading utilities focus on three design principles:

A single source of truth: Disparate systems with conflicting or incomplete data erode trust internally and externally. Strong CIS–CRM integration ensures consistent account, contact, and service data across departments. The result is fewer handoffs, less rework, and greater confidence in every customer interaction.

Workflow alignment with real customer journeys: Utilities deliver better service when workflows are designed around real-world scenarios and support how customers actually engage for issues like reporting a leak, disputing a bill, or requesting a payment plan. Technology should offer intuitive experiences, promote efficient resolution paths for staff, and reflect the customer journey, not how the utility is structured.

Empowered staff through visibility and training: Even well-designed systems fall short without strong adoption. Role-based training, intuitive interfaces, and clear ownership help employees understand not just how to use the tools, but how those tools support better outcomes for customers and the community.

Looking ahead: self-service, AI, and trust

Digital self-service is no longer a convenience; it is a core expectation. Usage dashboards, account management tools, and digital payment options give customers greater control over their accounts while reducing routine inquiries and freeing up staff to focus on more complex needs.

Emerging AI-enabled capabilities—such as high-bill alerts, outage prediction, and customer sentiment analysis—offer even greater potential to improve service and responsiveness. But for public utilities, these tools must be grounded in:

• Clean, well-governed data as the foundation
• Clear policies that prioritize transparency and explainability
• A deliberate focus on assistance and insight, not automation for its own sake

When implemented responsibly, AI enhances—not replaces—the human relationships at the heart of public service, helping utilities respond more proactively while preserving accountability and trust.

Key takeaways for utility leaders

• Prioritize data quality and integration early. It’s harder, and costlier, to fix later.
• Configure with intention. Limit unnecessary customization that adds technical debt and constrains future flexibility.
• Design around customer outcomes. Internal efficiency should support, not compromise, clarity, accessibility, and service quality.
• Treat CIS and CRM as strategic assets. Together, they enable trust, operational resilience, and long-term community relationships.

The goal is not to simply implement systems, but to strengthen the relationship between utilities and the communities they serve. CIS and CRM are not competing platforms; they are complementary tools. When thoughtfully aligned, they provide a foundation for responsive service, informed decision-making, and sustained public trust.

Through intentional CIS–CRM integration, utilities can move beyond reactive service models toward proactive, customer-centered engagement, delivering experiences that are not only more efficient, but genuinely customer-centered.

Interested in exploring how your utility can better align CIS and CRM? Let’s start designing a customer experience that truly connects you and your customers.

About BerryDunn

BerryDunn has a proven methodology for CIS and CRM system selection and implementation—one grounded in public-sector experience and tailored to each client’s unique needs. Our independence from vendors ensures that every recommendation serves the best interests of our clients. From early assessment to go-live support, we guide local governments and utilities through transformative CIS and CRM projects with clarity, rigor, and collaboration.

Focused on inspiring organizations to transform and innovate, our Local Government Practice Group partners with municipal, county, regional, and quasi-governmental entities throughout the US to help them meet their biggest challenges. Learn more about our team and services. 

This article is written for local government IT directors and technology leaders who are tasked with keeping critical systems running while navigating limited budgets and competing priorities.

Imagine a storm hits your community and there is widespread property, infrastructure, and facility damage; the emergency dispatch center goes dark, some facilities have power but most do not, powered computers show no network or internet connectivity, employee paychecks or vendor payments are delayed, and utility infrastructure asset information is not available. All because the technology supporting these mission-essential functions failed.

In local government, whether in city hall, county administration, or town offices, technology is often a critical dependency that keeps essential government services operational. When these systems go down, disruptions are often immediate and public. The stakes are high: lives might be at risk, critical payments can stall, and the public’s trust can quickly diminish.

In the aftermath, tough questions surface: what went wrong, and why were we not ready? Yet, despite these risks, many local governments still rely on informal, outdated, or generic business continuity (BC) and disaster recovery (DR) plans that simply are not up to today’s challenges.

Why business continuity and disaster recovery matters

At its core, BC/DR planning is about ensuring that essential services can continue, or be restored quickly, when disruption occurs. For local governments, these disruptions are not theoretical. Cyberattacks, severe weather, infrastructure failures, power outages, hardware failures, and even the sudden loss of key personnel are increasingly common events. Each of these scenarios has the potential to interrupt services that constituents expect to be available without interruption.

What makes BC/DR planning especially critical for local governments?

Unlike private organizations, local governments cannot simply pause operations, delay service delivery, or shift their focus until systems are restored and operations can continue. Public safety, public health, revenue collection, elections, social services, and regulatory responsibilities must continue, even under degraded conditions.

A BC/DR program provides a structured way to protect sensitive data, maintain service availability, and reduce the overall impact of disruptions. Just as importantly, it demonstrates due diligence and responsible stewardship of public resources, which is an expectation that citizens, auditors, and regulatory agencies increasingly share.

The local government reality: Challenges that shape BC/DR planning

While the need for BC/DR planning is clear, local governments face a set of challenges that make implementation more complex than in many private-sector environments. Through our work with hundreds of local governments, we’ve consistently seen these realities shape both planning efforts and funding decisions.

Budget constraints are often the most visible challenge. IT departments are routinely asked to do more with less, and technology investments must compete with highly visible community priorities such as public safety equipment, infrastructure projects, and staffing needs. Because BC/DR initiatives are preventive by nature, their value can be difficult to articulate when systems are functioning normally. The absence of recent incidents can create a false sense of security, even as risks continue to grow.

Many local governments are also managing significant technical debt. Core systems supporting finance, payroll, permitting, utilities, and public safety are often built on legacy platforms that were not designed with modern resiliency in mind. These systems may lack robust backup or replication capabilities or may require specialized knowledge to restore.

Adding to this complexity is the high level of public and political visibility local governments face. When systems fail, the disruption is immediately apparent to constituents and often amplified through media coverage and social channels. As a result, BC/DR planning is not just a technical concern; it is a matter of governance, accountability, and public trust.

Making the business case

For IT directors seeking funding, the most effective BC/DR business cases move beyond technical details and focus on organizational risk. Senior leadership and governing boards are less concerned with specific technologies than they are with the potential impact on services, finances, and reputation.

Framing the conversation in terms of service availability helps decision-makers understand what is truly at stake. Questions such as how long payroll can be unavailable, how long emergency dispatch systems can tolerate downtime, or what happens if utility billing is delayed are far more effective than discussions about backup schedules or infrastructure components.

Financial considerations are equally important. Downtime can lead to lost revenue, overtime costs, emergency contracts, and regulatory penalties, all of which directly affect the organization’s fiscal health.

Legal, compliance, and reputational risks represent a significant role in the business case. Data loss, missed statutory deadlines, or failures in public records systems can expose local governments to audits, litigation, and public scrutiny. By translating technical vulnerabilities into operational and financial terms, IT leaders can help stakeholders see BC/DR not as an IT expense, but as a core risk management investment.

While not every risk can be precisely quantified, even reasonable estimates can be powerful. Understanding the cost of downtime, the number of employees or constituents affected by an outage, and the frequency of incidents in peer communities provides valuable context for funding discussions. BerryDunn’s consulting team regularly works with local governments to bridge this gap, helping leaders communicate risk in ways that align with executive and board-level priorities.

What a formal BC/DR program looks like in practice

A formal business continuity and disaster recovery program is an ongoing, governance‑driven effort, not a one‑time plan or technology purchase. Effective programs share several core components:

Clear ownership and governance

• Designated program ownership and executive sponsorship
• A defined governance structure and regular review cadence
• Alignment with organizational priorities and decision‑making processes

Business impact–driven planning

• A business impact analysis (BIA) that identifies critical services based on defined financial, regulatory, and operational impact criteria
• Documentation of key dependencies across systems, vendors, and staff
• Defined recovery targets, including acceptable downtime and data loss

Risk and continuity strategies

• Risk treatment and continuity strategies tailored to priority services
• Coverage across facilities, staffing, technology, third‑party providers, and communications
• Practical strategies aligned with available resources and constraints

Actionable recovery documentation

• Disaster recovery runbooks that translate strategy into step‑by‑step recovery actions
• Clearly assigned roles and responsibilities
• Current, accessible documentation that reflects the environment as it exists today

Testing, measurement, and improvement

• Regular exercises, from tabletop scenarios to full recovery tests
• Structured tracking and resolution of gaps identified during exercises
• Ongoing measurement using metrics such as recovery time objectives (RTOs), recovery point objectives (RPOs), test success rates, and mean time to recovery (MTR)

Over time, these elements work together to create accountability, validate readiness, and support continuous improvement—ensuring the program evolves alongside organizational and technology changes.

How BerryDunn can help

BerryDunn works with local governments across the country and understands that successful BC/DR programs must be practical, scalable, and aligned with the individual local government’s priorities. Our approach is grounded in a combination of our local government knowledge and application of best practice frameworks.

We work collaboratively with IT leaders, department heads, and executive teams to identify what truly matters to their communities, prioritize investments based on risk and impact, and communicate clearly with leadership and governing bodies. By right-sizing solutions and aligning them with governance and budgeting processes, we help local governments build BC/DR programs that are sustainable over time. Learn more about our team and services.