Community Bank Compliance Costs Rise $1B in Two Years

Oct 12, 2017

Community bank compliance costs have increased by nearly $1 billion in the past two years, according to a new survey from the Federal Reserve and Conference of State Bank Supervisors. Economists at the St. Louis Fed estimate total 2016 compliance costs of $5.4 billion, or 24 percent of community bank net income. That is up from $5 billion in 2015 and $4.5 billion in 2014.

The survey said the costliest regulations are affiliated with the Bank Secrecy Act and TILA-RESPA, which respectively accounted for 22.3 percent and 21.2 percent of respondent banks’ compliance expenses. They were followed by deposit account compliance, qualified mortgage, Community Reinvestment Act, ability-to-repay, non-call report financial reporting, and Basel III capital regulations.

The survey of more than 600 community banks incorporates personnel, data-processing, legal, accounting and auditing, and consulting and advisory costs from call reports to develop the cost estimates. Released in conjunction with last week’s community bank research and policy conference, it offers further support for ICBA’s ongoing regulatory relief efforts.

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