As financial institutions look ahead to 2026, Inland Northwest banking leaders say the industry enters the new year with cautious optimism, steady deposit growth, and persistent affordability challenges that continue to shape the behavior of members and customers.

Steve Scranton, chief economist at Spokane-based Washington Trust Bank, describes the current landscape as a “K-shaped economy,” where large balance sheets at many big businesses and high-income households contrast sharply with persistent financial strain among many lower-income households and businesses. 

With the Federal Reserve expected to cut short-term rates again next year, but long-term rates likely to remain high, Scranton says 2026 is shaping up to be a year of growth, but not without complexity.

“Even though the overall picture looks solid, … people need to understand it’s a very bifurcated economy,” Scranton says. “It matters where you live and it matters where you fall in the income brackets as to whether you think this has been a good economy or a bad economy.”

Credit unions are facing those pressures firsthand through elevated credit card and auto loan charge-offs, rising community needs — particularly around food insecurity — and lingering housing affordability issues, says Angela Swenseid, senior vice president of accounting and finance at Liberty Lake-based Spokane Teachers Credit Union.

“We are cautiously optimistic about next year,” Swenseid says. “Growth will be a little stronger than we saw this year. We’re seeing members start to build up their savings. I think we could see a decline in loans that are charged off, and with rate decreases, we could see an increase in borrowing as well.”

Mike Wilson, CEO of Spokane-based RiverBank, says the community bank started 2025 expecting growth, however uncertain; yet the bank performed better than expected, he says. Steady growth occurred across most of the bank’s clients, 95% of which are small businesses. Additionally, while many financial institutions reined in loan lending, RiverBank didn’t, leading to over 10% loan growth in 2025, he says.

“It was important for us to keep going,” Wilson says. “We take our description as a community bank seriously.”

Looking ahead to the new year, Wilson projects financial sector growth to occur at a slower pace than in 2025.   

In 2025, the Federal Reserve has issued three quarter-point cuts to interest rates, lowering the target range to 3.50% to 3.75%. More cuts had been anticipated at the start of the year, Swenseid says; however, because inflation and unemployment data — two metrics that the Federal Reserve uses to determine whether to cut rates — were inconsistent and difficult to predict, the Federal Reserve did not make as many cuts as initially forecasted.  

According to the Bureau of Labor Statistics, as of September, the annual rate of inflation was 3% over the previous 12 months, one percentage point above the Federal Reserve’s 2% goal.

Gradual quarter-point cuts in 2026 likely will benefit businesses with variable-rate credit lines, as well as individuals with credit cards or variable-rate loans, Scranton says. However, long-term rates are unlikely to fall significantly and will likely stay in the 6%-7.5% range, he says.

“For the mortgage industry and businesses trying to finance long-term projects, I think the prospect for long-term interest rates is going to be hanging around where they’ve been the last two years,” Scranton says. “Because those are dependent on inflation coming down, which hasn’t happened too much, and the amount of debt the U.S. is issuing and whether they can find sufficient borrowers.”

The U.S. Mint’s halt of penny production is poised to create an operational headache for many financial institutions in 2026, says Swenseid. Banks, credit unions, and retailers have no federal guidance on how to handle rounding, transactions, or cash drawer standards once existing coin supplies run out, she explains.

STCU is issuing and accepting pennies for now, but that's expected to change as inventories deplete. Financial institutions will have to build their own policies from scratch, reconfigure internal cash systems, update training materials, and coordinate with retailers, all while explaining confusing transactions to consumers. While the penny is no longer being minted, it will remain legal tender, she adds.

“Some organizations are always rounding up, others are always rounding down,” Swenseid says. “We’re still navigating that, and there’s just no standard to follow.”

Dan Hansen, STCU’s chief marketing officer, anticipates that every financial institution will launch a dedicated ‘penny project’ in the first quarter of 2026 to sort out the details.