- Non-interest expenses, or overhead costs, are rising across community banking organizations (CBOs)_, though remain below pre-pandemic levels. In 2025, median overhead costs increased to 2.56 percent of average assets across CBOs, a 5-year high, compared to 2.28 percent in banks over $10 billion.
- Non-interest expenses relative to asset size are highest in the smallest banks. In banks with assets under $250 million, median overhead costs rose to 2.68 percent of average assets in 2025.
- Across CBOs, salary and benefit expenses comprise the majority (54 percent) of overhead costs, premises and fixed asset costs represent 9 percent, and other non-interest expenses comprise 36 percent. Other expenses, which are not required to be itemized on Call Report filings unless over certain thresholds, have been the primary driver of rising overhead in recent years, while salary and benefits have also increased, though modestly.
- In the 2025 Conference of State Bank Supervisors Annual Survey of Community Banks,_ bankers consistently reported costs as a top risk, specifically citing concerns over technology costs and compliance costs. According to the surveys, smaller banks spend a higher share on compliance.
Questions or comments? Please contact KC.SRM.SRA.CommunityBankingBulletin@kc.frb.org
Endnotes
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1
Community banking organizations are defined as having less than $10 billion in total assets.
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2
External LinkConference of State Bank Supervisors Annual Survey of Community Banks
The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.