2026 Banking & Finance Outlook: Casey Pyle

Pyle’s 2026 Projection: I don’t anticipate anything earth-shattering to change in our industry or this region over the next year. We’re insulated in Springfield, and the economy is relatively stable here. The Fed’s rate reductions could result in compressed profit margins for banks, and we may not see a lot of job growth across the industry. At the same time, as financial crimes become increasingly sophisticated, we are often spending more on prevention personnel and software.

What will be the impact of tariffs in the coming year?
What almost everyone has been able to do – our customers and across the larger economy – is pass on inflationary costs and continue to increase prices so they maintain margins for profitability. By the time those costs have trickled down, it’s not seen as a direct cost to our customers here in this market.

The Federal Reserve reduced interest rates three times in 2025. What’s the ongoing impact?
The economy seems to be doing fine, even with rates where they have been. Here in the Midwest and Springfield region, I don’t know that the labor market has been as volatile as it’s been in other areas. If anything, the rate reductions, including in the last quarter of 2025, for our industry, will actually compress our profit margins. Our costs of gaining deposits have been going up over the last two years. As interest rates were high, loan interest rates were high. Now, our loan rates are coming down as our deposit rates went up. For larger banks, when margins compress, they generally resort to layoffs or not rehiring for positions as retirements or resignations happen. Our loan rates have come down relatively quickly here in the last quarter. It’ll take a while to price our deposits back lower, as well. I’d like to think the interest rate market will essentially flatline to stabilize the economy, get their inflation goal where they want it to be.

What’s the status of employment?
The labor market hasn’t been stressed in this region. It’s pretty much unchanged. There are a couple bank acquisitions happening in this market in 2026 that may present some opportunities to hire people that aren’t satisfied with the new employer or may be laid off. Banking is a carousel of resignation or retirement. Across our industry, there are not a lot of new positions. The baby boomer generation continues to age out. So, those positions will be backfilled. I don’t think there will be growth in our industry; the higher level of growth than we’ve historically had.

What is being done for financial crime protection?
It’s an increased focus and expense for us, both in personnel and software. We have hired a risk management officer, and she has a staff of four in this market. We attempt to do a lot of customer communication education. For customers that use our app, those quicker and 24/7 types of communication are one of the tools we can use. We can also push out warnings for schemes or frauds.

What is changing in banking technology and how is that impacting customer service?
We have technology but still need to fill the need for people that want to do a drive-through transaction with a human. It was going too far towards self-service. They’ve made it so lean that they can’t get good service. At the same time, those banks that are cutting frontline staff, they’re probably keeping those positions on the backside doing risk research and fraud prevention. That part of our jobs, our industry is increasing.