Slideshow Cost and Effect: What Regulation Does to Growing Banks

  • April 27 2016, 8:30am EDT
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A number of banks have recently crossed $10 billion in assets, where caps on interchange fees and mandatory stress testing kick in, and more are set to pass the threshold shortly. Here is a look at the annual toll regulation will take on many of those institutions.

Chemical Financial: $12 million

The Midland, Mich., company has projected that crossing $10 billion in assets will cost it $10 million in revenue in 2018 due to caps on debit card interchange fees, while increasing annual compliance costs by $2 million. The $9.3 billion-asset company, led by CEO David Ramaker, hopes to offset the hit by buying Talmer Bancorp.

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United Community Banks: $11 million

United Community CEO Jimmy Tallent has estimated that the Blairsville, Ga., company could lose $9 million in interchange income and add up to $2 million in compliance-related expenses when it reaches the $10 billion-asset mark. The company has about $9.6 billion in assets now, with an acquisition pending.

Bank of the Ozarks: $10.7 million

The Little Rock, Ark., company crossed the $10 billion-asset threshold in the first quarter. The now-$11.4 billion-asset company, led by CEO George Gleason, expects to lose nearly $5.4 million annually because of the Durbin Amendment's cap on interchange fees. Compliance costs are expected to be $5.3 million higher in 2017 than they were last year.

Pinnacle Financial: $10 million

The Nashville company will approach $10 billion of assets after it buys Avenue Financial. It will likely cross that mark in the next year or two and, once it does, could lose nearly $8 million in annual interchange revenue. CEO Terry Turner has also estimated that Pinnacle faces more than $2 million in new compliance costs tied to stress testing and higher FDIC assessments.

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First Midwest Bancorp: $4.1 million or more

The $10.7 billion-asset First Midwest, led by CEO Michael Scudder, has said that a cap on interchange fees that should take hold in mid-2017 could cost it $4 million to $5.7 million in annual revenue. The company hasn't said how much its compliance costs could increase.

BBCN Bancorp: $1.5 million or more

BBCN, led by CEO Kevin Kim will surpass $10 billion in assets when it buys Wilshire Bancorp. BBCN, which doesn't rely much on interchange, expects annual revenue to fall by $1.5 million when it crosses the regulatory threshold. It is unclear how BBCN's compliance costs will change once it starts reporting stress test results in mid-2018.