KBRA Financial Intelligence

Bank Credit Quality in Focus Ahead of Earnings Season

A slate of major U.S. banks will begin reporting their latest quarterly earnings figures later this month, with JPMorgan Chase & Co. (NYSE: JPM) (KFI Score: B+) set to kick off the industry’s earnings season on January 13. Consensus earnings estimates, as well as stock prices, multiples, and recent beat or miss history for publicly traded banks can be viewed in the KBRA Financial Intelligence (KFI) web app.

Four U.S. banks maintaining assets exceeding $2 trillion will report earnings throughout the same week. Combined net income figures of these institutions, including JPM, Bank of America Corp. (NYSE: BAC) (KFI Score: B), Wells Fargo & Co. (NYSE: WFC) (KFI Score: B), and Citigroup Inc. (NYSE: C) (KFI Score: B+), has risen across a period of four consecutive quarters to 3FQ 2025.

Ahead of upcoming 4FQ 2025 bank earnings, KFI has launched its latest platform enhancement, enabling users to view credit quality history pertaining to bank loan portfolios. This data presents reported credit quality information based on institutions’ internal risk-grading framework, as disclosed under U.S. Generally Accepted Accounting Principles (GAAP). The underlying categorizations reflect management’s assessment of borrower credit risk and repayment capacity as of the reporting date and are a key input in estimating expected credit losses. Loans are sorted into descending regulatory risk grades, ranging from pass—denoting that a loan is performing as expected with no material credit concerns—to loss, where a loan is considered uncollectable and should be charged off.

Credit quality measures can be monitored at the individual institutional level within KFI’s web app. Bank loans can be sorted by category and segmented origination year or viewed as a time series of loans assessed by the bank over multiple fiscal quarters. In addition, loans reported by a grouping of banks can be compiled via our Excel Add-In.

KFI’s analysis finds that the share of bank loans considered criticized—an aggregation of the special mention, substandard, doubtful, and loss categories—has been trending lower, falling to a two-year low of 15.7% in 3FQ 2025. While credit quality designations do not, in isolation, determine nonaccrual status or loss recognition, trends in criticized exposures can provide insight into emerging and realized credit stress within the portfolio. As of the latest data, it appears that such stress has generally abated in recent quarters, despite publicly traded U.S. banks accelerating their pace of loan growth.

Upcoming earnings reports will reveal whether banks have continued to support net income growth through expanding loan growth in their core banking businesses. Further, credit quality data will be a critical barometer of whether loan performance will continue to improve.

December 2025 M&A

Green Bay, Wisconsin-based Associated Banc-Corp (NYSE: ASB) (KFI Score: B), parent of $44.4 billion Associated Bank, National Association (KFI Score: B), announced in a December 1 press release that it will acquire American National Corporation (KFI Score: B) of Omaha, Nebraska, and its $5.3 billion commercial banking subsidiary American National Bank (KFI Score: B). The all-stock transaction is valued at $604 million and is expected to close in 2Q 2026.

Lubbock, Texas-based South Plains Financial, Inc. (NASDAQ: SPFI) (KFI Score: B), parent of $4.5 billion City Bank (KFI Score: B), announced in a December 1 press release that it will acquire BOH Holdings of Houston and its $771 million commercial bank subsidiary Bank of Houston (KFI Score: B+). The all-stock transaction is valued at $106 million and is expected to close in 2Q 2026.

Pittsfield, Massachusetts-based Greylock Federal Credit Union (KFI Score: B) announced in a December 10 press release that the $1.7 billion credit union will acquire Franklin First Federal Credit Union (KFI Score: B+) of Franklin, Massachusetts, which maintains $84 million in assets. Transaction value was not disclosed; the deal is expected to close in 2Q 2026.

Chicago-based Enova International, Inc. announced in a December 11 press release that it will acquire Grasshopper Bancorp, Inc. and its $1.4 billion commercial bank subsidiary Grasshopper Bank, N.A. (KFI Score: C+) of New York City. The cash transaction is valued at $369 million and is expected to close in 2Q 2026.

Talladega, Alabama-based FirstBanc of Alabama, parent of $1.1 billion First Bank of Alabama (KFI Score: B), announced in a December 11 press release that it will acquire FBDC Financial Corp. and its $162 million commercial bank subsidiary First Fidelity Bank (KFI Score: B+). The cash and stock transaction is valued at $20.5 million and is expected to close in 2Q 2026.

Ann Arbor, Michigan-based University Bancorp, Inc. (OTCQB: UNIB) (KFI Score: B-), parent of $1.1 billion University Bank (KFI Score: B), announced in a December 15 press release that it will acquire Greater Pacific Bancshares of Whittier, California, and its $167 million commercial bank subsidiary Bank of Whittier, N.A. (KFI Score: A-). The cash and stock transaction of undisclosed value is expected to close in 2Q 2026.

Ontario, California-based CVB Financial Corp. (NASDAQ: CVBF) (KFI Score: B+), parent of $15.7 billion Citizens Business Bank, N.A. (KFI Score: B), announced in a December 17 press release that it will acquire Heritage Commerce Corp. (NASDAQ: HTBK) (KFI Score: B+) of San Jose, California, and its $5.6 billion commercial bank subsidiary Heritage Bank of Commerce (KFI Score: B+). The all-stock transaction is valued at $811 million and is expected to close in 2Q 2026.

Fresno, California-based Community West Bancshares (NASDAQ: CWBC) (KFI Score: B), parent of $3.6 billion Community West Bank (KFI Score: B-), announced in a December 17 press release that it will acquire United Security Bancshares (NASDAQ: UBFO) of Fresno, California, and its $1.2 billion commercial bank subsidiary United Security Bank (KFI Score: B). The all-stock transaction worth $192 million is expected to close in 2Q 2026.

Overbrook, Kansas-based Overbrook Bankshares, Inc., parent of $100 million The First Security Bank (KFI Score: B), announced in a December 22 press release that it will acquire Norcon Financial Corp. of Conway Springs, Kansas, and its $126 million commercial bank subsidiary Conway Bank (KFI Score: D). The transaction is expected to close in 1H 2026.

Alexandria, Virginia-based Burke and Herbert Financial Services Corp. (NASDAQ: BHRB), parent of $7.9 billion Burke and Herbert Bank and Trust Co. (KFI Score: B-), announced in a December 22 press release that it will acquire LINKBANCORP, Inc. (NASDAQ: LNKB) of Camp Hill, Pennsylvania, and its $3.1 billion commercial bank subsidiary LINKBANK (KFI Score: B). The all-stock transaction worth $354 million is expected to close in 2Q 2026.

Toms River, New Jersey-based OceanFirst Financial Corp. (NASDAQ: OCFC) (KFI Score: B), parent of $14.2 billion OceanFirst Bank, N.A. (KFI Score: B), announced in a December 29 press release that it will acquire Flushing Financial Corp. (NASDAQ: FFIC) (KFI Score: B) of Uniondale, New York, and its $8.9 billion commercial bank subsidiary Flushing Bank (KFI Score: B). The all-stock transaction worth $579 million is expected to close in 2Q 2026.

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