Community Bank Access to Capital
Since 2007, the public capital markets have often been either unavailable or unattractive to many community banks and holding companies. Community banks have had to rely more on existing shareholders, directors and insiders for capital raises and less on new investors, including institutions and private equity investors.
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Position & Background
ICBA supports legislative and regulatory changes that would improve the ability of community banks to raise capital.
ICBA supports legislative and regulatory changes that would regularly raise and index asset thresholds, giving community banks more room to grow before facing costly regulatory requirements and improving their ability to attract and build capital.
ICBA opposes the inequitable capital treatment of community banks, based solely on corporate structure. Subchapter S banks should receive the same capital treatment as Subchapter C banks when participating in programs designed to increase capital investments in local communities.
SEC Regulation D should be revised so that the definition of an “accredited investor” includes individuals with a net worth of $1 million or more, including their primary residence.
ICBA is supportive of additional upward adjustments to the asset limits under the Federal Reserve’s Small Bank Holding Company Policy Statement to ensure these thresholds remain current and properly align with industry consolidation trends.
Since 2007, the public capital markets have often been either unavailable or unattractive to many community banks and holding companies. Community banks have had to rely more on existing shareholders, directors and insiders for capital raises and less on new investors, including institutions and private equity investors.
Additionally, expensive regulatory requirements deter community banks from growth, by requiring banks above a certain asset size to incur greater regulatory costs. Many of these static, outdated thresholds have not been updated in decades and were intended to apply only larger banks but now capture many more community banks due to outdated asset thresholds.
ICBA Expert Contacts
Jenna Burke
