Community banks cite compliance as greatest challenge

A recent survey conducted by market research firm T. Aloise & Company revealed that 51 percent of community banks maintain that their greatest challenge will be dealing with shifting compliance burdens.

As new regulatory standards mandated by the 2010 Dodd-Frank Act, Consumer Financial Protection Bureau and the Truth-in-Lending Act begin to take effect, community banks have voiced concerns regarding the increased compliance costs and burden, according to

Small community banks, community banks with less than $500 million in assets, were more likely to see compliance as a personnel issue, as these institutions will have to hire and retain compliance staff. Mid-size community banks, which have between $500 million and $999 million, as well as large banks with more than $1 billion in assets, however, had a tendency to see compliance as a service issue.

“Regulation is becoming a big issue and you’ll see people exiting smaller community banks,” one community banker said in the study, reports. “It has become overwhelming for smaller players that were only able to do a handful of deals a month. Business might flow to larger-size banks. As people get used to the regulations, they might re-enter the business or they might not.”

Additionally, community banks are concerned that larger banks will draw borrowers away, as bigger institutions have more resources to deal with the increasing compliance burden.

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