Independent Banker - September 2023 - 56

ahead-well in advance of reaching
the next level.
" Banks approaching the various
asset thresholds must plan far in
advance, because the learning curve
can be steep and the process of
making necessary changes can be
lengthy, " says John M. Geiringer,
partner in the financial institutions
group at Barack Ferrazzano. He
advises banks on regulatory,
governance and investigative issues.
Here are several tips to help
community banks prepare to meet a
higher asset threshold.
Start with a culture of compliance
Community banks should start by
making sure they have a strong
compliance management process,
says Ben Baboval, chief compliance
officer for $2 billion-asset MainStreet
Bank in Fairfax, Va. This includes
ensuring that:
* The bank knows its compliance
responsibilities
* Employees know their respective
compliance roles
* Proper risk assessments are
being done
There are tools for monitoring for
regulatory changes so the bank can
anticipate new requirements.
Baboval says, " If you don't have
that initial groundwork, it's all going
to fall on its face from a regulatory
change management perspective. "
Smaller banks, too, should keep
in mind that just because they aren't
required to meet certain thresholds,
there's nothing to say they can't
adopt them as a best practice. In fact,
" formal asset threshold requirements
tend to trickle down informally to
smaller institutions, as examiners
look to those requirements as worthy
benchmarks, " Geiringer says.
Accordingly, some community
banks may voluntarily decide to
adopt certain formal requirements for
larger institutions as best practices for
themselves, he says.
The Congressional Research
Service offers an online guide
56 // ICBA Independent Banker // September 2023
-JOHN M. GEIRINGER, BARACK FERRAZZANO
(bit.ly/regulatorythresholds),
which is a good starting point
for community banks looking
to understand more about their
responsibilities at different
thresholds. They may also want to
consult with their legal department or
other advisors.
A timeline for regulatory change
Community banks need to get
the wheels turning ahead of an
approaching threshold, but how far
in advance can vary. A general rule
of thumb for community banks is to
plan six to 12 months in advance,
depending on the size of the bank
and the complexity of the changes
required, says Joseph E. Silvia,
member of Detroit-based law firm
Dickinson Wright, who represents
financial institutions on regulatory
and other matters.
" It takes people time to coordinate
and get meetings set up and get into
the nitty gritty, " Silvia says. " Starting
earlier gives you more time and more
flexibility at the bank to prepare. "
MainStreet Bank, for instance,
started prepping two years before
it would surpass the Community
Reinvestment Act (CRA) threshold.
When it came time to start reporting
the necessary data in 2023, it had
adequately tested and implemented
the new processes necessary for its
enhanced reporting requirements.
For $800 million-asset Bank of
Charles Town in Charles Town, W.Va.,
a similar transition took about a year,
says Larissa R. Carson, vice president
and compliance, BSA and CRA officer.
Richard Kloch Jr., a financial
services partner at Crowe LLP, offers
another example of a community
bank with about $500 million of
assets that was aiming to grow
organically to more than $1 billion
in assets. This bank started planning
several years in advance and hired a
consultant for an outside perspective,
since reaching the new threshold
would bring certain auditing
requirements under the Federal
http://bit.ly/regulatorythresholds
Independent Banker - September 2023

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