Matt Spillman doesn't hesitate to vent about how hard it is to keep up with the myriad rules that his community bank must adhere to, much less ensure total compliance.
"The regulatory risk is now greater then ever," says the president of Bank of Billings, a $54 million asset bank. "It's really tough to find good direction and good information that is broken down into common sense for a banker."
The bank has turned to outside help, licensing a Wolters Kluwer product called ComplianceOne to aid in the management of loan documents. The software is updated by Wolters Kluwer remotely as regulations change or are updated. "As soon as we log in, as long as we upload the updates, we know our forms are in compliance with both federal and state regulations," says Spillman. "Smaller banks like ours can't afford a compliance officer."
Wolters Kluwer deploys lawyers and compliance analysts who monitor changes in federal and state banking laws and regulations and update the interface so the forms are up to date when bank staffers fill out loan documents, ask consumers for information, or distribute statements and reports to consumers and other parties.
Bank of Billings must follow state regulations and a slate of federal regulations, such as RESPA and Reg Z, which are being reformed to accommodate changes in credit risk and loan disclosure requirements. The fact that these rules are in flux, leaves lots of room for interpretation that the bank can't keep up with, considering its size. There's also a question over which rules it has to adhere to.
While small banks generally are not subject to the Dodd Frank law, Spillman says Bank of Billings will probably still be under the "umbrella" of some of its provisions, which creates further uncertainty.
Bank of Billings is obviously not alone among community banks stressed by regulatory compliance with limited resources. Some are pooling their resources to achieve efficiencies of scale, as well as access to information on regulations. The Texas Bankers Association recently introduced a program that provides compliance outsourcing for its members, and the Oklahoma Bankers Association entered into a partnership with the Glia Group, a local law firm, to offer consulting and information on compliance to its members.
