The aim of the article is to assess the economic and financial condition of cooperative banks in Poland in 2020-2022, i.e. in the period of deterioration of the conditions of banking activity and the resulting specific market and regulatory challenges. It has been shown that many indicators of the activity of cooperative banks have improved compared to previous years, especially 2017-2019, or reached levels comparable to those recorded in the years of economic prosperity. This applies to e.g. return on assets and return on equity ratios and the loan portfolio quality ratio. Comparison of the financial results achieved by cooperative banks in 2020-2022 with the results of commercial banks shows that in difficult conditions for banking activity, local banks showed good economic condition and financial efficiency. However, this does not change the fact that cooperative banks must continue to adapt their operating model to modern market and regulatory challenges, in particular to technological challenges and growing customer expectations in terms of the quality of banking services.