Bank trade groups are supporting a plan that would relax restrictions on banks and thrifts sharing top personnel.
Federal laws prohibit bank executives and directors from serving two institutions in the same market if the banks or thrifts have combined assets of $20 million.
But with talent scarce in some markets, regulators in August proposed boosting the threshold for sharing personnel to 20% of local deposits.
Robert G. Rowe, regulatory counsel with the Independent Bankers Association of America, said the plan would particularly help small-town banks.
He said that recruiting directors has become harder in small towns because regulators have demanded that they have more "financial sophistication."
"The bar has been raised for finding qualified directors," Mr. Rowe said.
The American Bankers Association and America's Community Bankers also support the measure, which was proposed by the four bank and thrift regulatory agencies.
A survey of chief executive officers, released this week by Professional Bank Services Inc. of Louisville, Ky., illustrates the problem for small banks.
Thirty-four percent of banks with less than $100 million of assets have trouble filling vacant board seats, the survey found. Only 16% of those with $500 million to $1 billion cited director recruitment as a concern.
Also, banks with below-average performance ratios have far more trouble recruiting directors than top-rated banks, the survey found.
Joseph B. Ford, president and chief executive officer at $32 million- asset Capital Bank in Little Rock, said relaxing the restrictions could also help small banks compete with big ones.
Capital Bank already teams up with other small banks to make large loans, and it outsources its data processing to a community bank 50 miles away, Mr. Ford said. Changing the rules could increase cooperation among community banks and create more formidable competition for larger banks, he said.
"This is going to give us a stronger foothold," Mr. Ford said.
Regulators also plan to amend the rules for banks that do not compete in the same markets.
Under current rules, banks and thrifts may not share personnel if one bank's assets are above $1 billion and the other's exceed $500 million, regardless of location. The proposal would raise the thresholds to $2.5 billion and $1.5 billion.
