At least 25 community banks have announced in recent weeks that they would stop filing financial reports with the Securities and Exchange Commission in response to a new law aimed at reducing red tape for small companies.

Many more are expected to follow, too, as executives of small banks weigh the benefits of registering their shares with the SEC against the cost of compliance.

The Jumpstart Our Business Startups, or JOBS, Act that President Obama signed into law in early April included a provision that lets banks whose shares are thinly traded deregister those shares and eliminate the costs associated with filing all those 8-Ks,10-Qs and 13-Ds.

Banks are eligible to deregister if they have fewer than 1,200 shareholders. Also, any privately held bank looking to raise more capital would only have to register if they have 2,000 or more shareholders. That threshold was 500 shareholders before the law was passed.

According to OTC Markets Group, a New York firm that operates a platform for thinly traded stocks, roughly 275 banks that now report financial results and other regulatory matters to the SEC are eligible to deregister their shares. That is not including banks that have similar reporting requirements with the Federal Deposit Insurance Corp. or other small banks that are slightly over the eligibility threshold and might be looking to buy out shareholders in order to take advantage of the new law.

The latest community bank to announce plans to deregister was the $197 million asset First Bancshares in Mountain Grove, Mo. In a news release Thursday, its chairman and chief executive, Bradley Weaver, said that the move would reduce expenses by about $200,000 a year. "The decision to deregister from the SEC was driven by a desire to achieve substantial annual savings by reducing accounting, legal and administrative costs associated with being an SEC registrant," he said.

First Bancshares' stock is currently traded on Nasdaq and it will move to the Over-The-Counter exchange following its deregistration later this month.

In data provided to American Banker, OTC Markets said that of the 413 banks that currently trade on Nasdaq, 189 of them, or 46%, have fewer than 1,200 shareholders and are therefore eligible to stop filing with the SEC. Additionally, 85 banks whose shares currently trade Over-The-Counter are also under the 1,200-shareholder threshold, OTC Markets said.

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