A new report from the Conference of State Bank Supervisors shows that net interest margins have replaced regulatory burdens as the top external risk for community bankers.
According to the 2025 CSBS Annual Survey of Community Banks, community bankers said their internal concerns are staying steady, while external threats have shifted dramatically. Now in its 12th year, the annual survey measures what community bankers see as their top internal and external risks, as well as competition, safety and soundness and deposit insurance policies.
“One of the biggest shifts in this year’s survey was that community bankers expressed less concern over regulatory burden and are now primarily focused on managing interest rate risks and maintaining and growing deposits,” CSBS President and CEO Brandon Milhorn said. “The survey also revealed greater concern over uncertain economic conditions and continuing risks associated with the cost and integration of new technologies.”
The survey found that regulatory burden feel to the sixth highest concern in the midst of the changing political landscape, and that core deposit growth rose to second followed by economic conditions, cost of technology and cost of funds.
Internally, cybersecurity remains a top risk, surpassing all other risks by a wide margin. Technology implementation and related costs came in second, while credit replaced liquidity in third place.
Community banks said local regional banks were their primary competitor for payment services, with nonbank institutions as the second highest. Competition for payment services showed the largest change with competition from nonbanks without a physical presence in the marketing increasing.