Last year, stronger balance sheets gave banks room to lower funding costs and rebuild margins. But that relief has shifted the competitive dynamic. Deposits grew faster than loans in 2025, leaving a lot of cash chasing a limited number of good deals. The outcome is what you’d expect: tighter spreads, more aggressive pricing, and more pressure on overall relationship terms, even as margins look better on paper.
That puts the focus back on execution, this article says. Having more funding doesn’t mean you should price more aggressively; it means being more selective about where to put money to work and how to structure deals.
Is your institution using stronger liquidity to your advantage or giving it up in pricing? Where are you willing to stretch on deals, and where are you holding the line? How are you ensuring you get the full value of relationships instead of just booking another loan?
Read this Q2 Precision Lender report for a clearer view of how deposit growth, loan demand, and competition shifted last year, and what these dynamics mean for the industry going forward.