The report mentions Prosperity Bancshares, a Houston-based financial holding company, with an estimated $9.83 billion in assets. David Zalman, the CEO of Prosperity Bancshares, said in the report that the bank curbed deposit income and delayed a pair of deals to remain under the $10 billion mark until the company could afford the costs associated with the regulation, according to SNL.
At the end of February, in a deal valued at close to $500 million, Prosperity Bancshares announced its plans to buy privately-held American State Financial Corp, a move that could push the company well past the $10 billion target.
Financial analyst Brad Milsaps of Sandler O’Neill & Partners LP said that, for many banks, including Prosperity Bancshares, that are near but still under the $10 billion mark, executives have made a deliberate attempt to avoid the Durbin Amendment, SNL reports. The Durbin Amendment is a provision of the 2010 Dodd-Frank financial reforms that puts a cap on interchange fees, the amount a bank can charge a merchant to process a debit transaction.
“So for Prosperity, clearly the thinking is, when you go past $10 billion, go well past it,” Milsaps said, according to SNL.
Other banks, such as the Chicago-based MB Financial Inc., have also stayed below the target. At the end of 2011, MB Financial Inc. reported $9.83 billion in assets, shrinking by $490 million from its reported $10.32 billion in 2010, SNL reports. Milsaps said that the company has signaled that it plans to remain under the mark until it is able to move quickly past it.
“They appear happy to be under the threshold until there’s a compelling reason for them to go well over,” Milsaps said, according to SNL.
MB Financial executives said that the move to stay under the $10 billion threshold is not only to avoid the Durbin Amendment but also increasing regulations, as moving past the $10 billion mark subjects the institution to heavy oversight by agencies such as the Consumer Financial Protection Bureau.