Some banks are purposefully staying below the $10 billion mark in assets in order to avoid compliance with the Durbin Amendment, according to a new analysis released by Charlottesville, Va.-based SNL Financial.
According to a report issued by SNL, several banks at the $10 billion threshold have purposefully stayed under that number, at least until they are in a position to grow well past it in order to offset losses due to coming under heightened regulatory scrutiny.
[For more on the Durbin Amendment, see related article]
The Durbin amendment, part of the Dodd-Frank financial reform bill, caps the amount banks can charge retailers for swiping their debit cards. The cap limits the fee to an average of 24 cents per transaction instead of the previous industry average of 44 cents.
The SNL report cites David Zalman, CEO of Prosperity Bancshares (Houston, $9.83 billion in assets), who said the bank curbed deposit inflows and put off completion of a pair of small deals to stay under the mark, until it could surge well past it. That occurred recently, when Propsperity announced it was acquiring American State Financial Corp., which has about $3 billion in assets.
SNL notes other banks who have purposefully stayed under the $10 billion mark, such as Chicago-based MB Financial, which actually shrunk its assets slightly in 2011.
According to SNL, MB Financial executives indicated the reason for this was not just to avoid Durbin, but the overall heightened regulatory pressure that can come with moving past $10 billion -- including being subject to the oversight of the Consumer Financial Protection Bureau, being required to bolster risk-management efforts and facing annual stress testing, among other requirements.