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What banks should do as they approach $10 billion in assets

Apr 17, 2022

The consolidation trend in the banking industry has driven more financial institutions toward and across the $10 billion asset mark, a threshold that comes with more scrutiny from regulators.

If banks haven’t prepared for those changes, they can and will leave management gasping for air, trying to keep up with new rules by applying Band-Aids rather than long-term effective solutions.

Twelve banks reached $10 billion in assets in 2020. By Q3 2021, 20 financial institutions were on the cusp of the $10 billion threshold, and mergers and acquisitions could push more into that category quickly. Three banks grew past the $10 billion threshold in Q4 2021.

Community banks sitting at $4 billion or $5 billion in assets may view $10 billion as a distant goal, but they’re just one or two acquisitions away from $10 billion and the increased regulation and the loss of certain revenue streams that come with it.

For bank executives in that group, the time to prepare is now. Gearing up for the rules and regulations as well as planning to replace lost revenue that come at the $10 billion asset figure can take a good 12-18 months or more. Consider these tips as you embark on that process.

Know the basics

Reaching $10 billion in assets means examinations and increased scrutiny by the Consumer Financial Protection Bureau. The scrutiny will be greater, the communication more frequent. Preparing your team for this shift is crucial to a seamless transition across the $10 billion asset mark.

The Dodd-Frank Act will require an annual stress test to ensure your financial institution can absorb losses and handle difficult economic times. This can be a complex process that may require hiring outside help to manage.

The Volcker Rule also kicks in, which, among other things, bans proprietary trading and participation in most hedge and private equity funds. Also, the Durbin Amendment to the Dodd Frank Act limits the amount of interchange fees that can be charged. Ultimately, it can affect profitability, which may dip at least initially.

Assess staffing

Look at the team you have in place now. Will it be the same team that carries you through the $10 billion threshold? Probably not. At the very least, more staff will be required. Think about the team you want and need to be in place when you hit $10 billion, and take steps now toward that staffing goal.

Hire for growth. Internal audit and risk management staffing will be especially crucial. And if a merger is involved, vendor management gets complex. Hire a team to look at treasury services and sales to maintain profitability and keep shareholders happy.

In this economy, and with current workforce trends, finding and keeping good people is as challenging as ever. Be proactive about it. Have a plan for hiring and staff development and execute it. Likewise, know your succession plan. Have you identified the next wave of executive leaders? If not, don’t put it off.

Consider outside consultants, too. An experienced second set of eyes to make sure each part of the operation is doing what it needs to do can make a huge difference.

Train and educate

Everyone in the organization needs to know what reaching $10 billion in assets means for them and how it changes their work expectations and routine. That goes for the top-level executives, the customer-facing bank tellers and everyone in between.

The IT department will play a key role in ensuring the integrity and availability of documents and data as well as increasing security efforts. More assets make financial institutions a larger target for cyberattacks. As the organization’s IT infrastructure becomes more complex, so do the risks of business continuity, vendor management, security administration, acquisitions, strategic planning, change management and security monitoring. These risks typically mean that the IT department needs more “firepower” to keep up with mitigating these risks and planning future growth.

The preparation and education during the run up to $10 billion will determine whether management is confident and ready or haggard and scrambling.

Choose your identity

Smaller banks rooted in community with a decades-long local reputation can quickly find themselves in new territory, especially after a merger or acquisition.

Is your financial institution aiming to grow into a regional operation? Or is community an essential part of your identity?

Make sure your marketing plan and messaging to customers is precisely what you want it to be. Banks with $10 billion in assets can still maintain that anchor-of-the-community reputation. Just know that in the eyes of regulators, you’re one of the big boys now.

How Wipfli can help

Our dedicated financial institutions team can help you meet these compliance requirements today and those you will face tomorrow. From growth and customer engagement to cybersecurity and regulatory compliance, our team can help. Learn more on our financial institutions services web page or check out these additional educational resources:


Anna Kooi, CPA
National Financial Services Industry Leader, Partner
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Carrie Connell, CPA
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