#USA #Arlington #IntraFi #bankers #Loan Demand

Bank Executives Face Increased Funding Costs

A recent survey conducted by IntraFi highlights the growing concerns within the banking sector about the operational challenges expected in the coming year. With expectations of rising funding costs, bank executives are bracing for a landscape with diminished loan demand. This observation is backed by responses from 411 bank leaders across the country, who participated in IntraFi's Bank Executive Business Outlook Survey between October 5 and 19, 2026.

Key Findings of the Survey

Increased Funding Costs

The survey results indicate a significant majority of bank officers anticipate higher funding costs, with 87% expecting an increase in the next twelve months—a notable jump from 84% recorded in the previous quarter. Mark Jacobsen, the CEO and co-founder of IntraFi, emphasized that bankers are encountering pressure from both sides of their balance sheets. He noted that the primary challenge lies in finding ways to foster growth without compromising profitability or overextending their financial capacities. This scenario emphasizes the necessity for disciplined pricing strategies, robust customer relationships, and adaptable funding approaches.

Bond Market Volatility Effects

Another critical area of concern is the volatility present in the bond market. The majority of respondents, 58%, noted that the primary impact of fluctuating long-term interest rates and bond market conditions would likely manifest as heightened funding costs or strain on net interest margins. This fear is compounded by the perception that 16% of those surveyed foresee additional unrealized losses, which could hamper capital flexibility.

Balance Sheet Strategies and Economic Outlook

When it comes to balance sheet strategies, about 47% of respondents reported a commitment to maintaining their current strategies. Moreover, 22% expressed a readiness to accept lower securities balances to create space for loans or liquidity, showcasing a shift in focus towards more secure avenues in tough financial times. Additionally, the economic outlook remains bleak, with 83% of respondents predicting that economic conditions will either worsen or stay stagnant over the next year. Interestingly, 78% anticipate that access to capital will remain stable, indicating a mixed sentiment in the market.

Mortgage Perspectives

On the housing front, amid concerns regarding rising interest rates and housing affordability, 74% of the surveyed executives indicated they are not actively pursuing products or programs aimed at assisting homeowners locked in at low mortgage rates to upgrade their living situations. This illustrates a cautious stance as banks navigate the complexities of rising rates while managing customer needs.

Conclusion

IntraFi's survey results paint a comprehensive picture of the banking industry's expectations for the year ahead. As banks brace themselves for pressures from various fronts, the ability to navigate increasing funding costs while trying to maintain strong customer relationships and profitable operations will be crucial. As the financial landscape evolves, the focus will be on strategic agility without compromising on service quality.

With over 20 years in the industry, IntraFi continues to be a trusted partner for more than 3,000 financial services firms, emphasizing relational quality over transactional volume to help banks effectively manage their liquidity needs and drive fee income opportunities.